TCS, Infy, Wipro among 5 to bag $2 bn BP deal

Forty global vendors reduced to 5. And 3 out of that quintet are Indian companies.

When UK-based BP plc (formerly British Petroleum), the oil giant, announced results of its vendor consolidation process on Wednesday, it certainly gave Indian software prowess the thumbs up.

The company has outsourced its conglomerate-wide information technology services work, valued at $2 billion, to IBM, Accenture, Tata Consultancy Services, Infosys Technologies and Wipro Technologies.

The contract is for five years, and would mean business in “multimillion dollars” for each company, though none of the players is sure of the size of its individual pie yet.
BP expects a saving of $500 million over the five-year period of the contract for SAP implementation.

“We had 40 different suppliers under different contracts who were providing us services such as application development and maintenance. We thought to standardise the processes and simplify the services to provide better service to our customers and cut down on costs. Thus the number of suppliers were brought down to five,” David Nicholus of BP press office told DNA Money over phone from London.

The five will provide application development and maintenance services largely for BP’s fuels value chain and corporate businesses globally.

“This $2 billion business will save $500 million over 5 years,” Nicholus said.
He did not reveal if there is scope for the deal size to expand in future. The deal with each of the five firms was done separately and not as a part of any consortium, Nicholus said.

He did not provide details of the contract size for each of the five vendors.
Anand Padmanabhan, senior vice-president & strategic business unit head for energy & utilities at Wipro, said the contract is for a defined value over the next few years. “It (the contract) is effective from now. We will take over and consolidate our business as we go forward,” he said.

Wipro and Infosys, however, did not reveal from which quarter the additional revenues will start reflecting in their books.

Analysts said more such vendor consolidation is inevitable across the globe which would throw opportunities for revenue growth for top Indian IT service firms whose revenues have lately been either flat or negative.

S Gopalakrishnan, chief executive officer (CEO) of Infosys Technologies, which already does business with BP, expects the scope of work to increase with consolidation of vendors in the coming years.

“We are already working with them but there is opportunity for growth and we will bid for opportunity,” he said.

Both Wipro and Infy said they would follow the global delivery model for the project.
Wipro plans to hire more people for the project while Infosys will be utilising the excess capacity sitting on bench.

“We are currently operating at around 70% utilisation so we can easily use to people sitting on bench,” said Gopalakrishnan.

A TCS spokesperson said the company currently has “adequate workforce” to handle the deal.