Wipro bags $300 m GM outsourcing deal

Bangalore, New Delhi, Feb 2 | Updated: Feb 3 2006, 05:30am hrs
Software services provider Wipro, the third-largest IT company in India, announced it has won a $300 million five-year contract from General Motors. The announcement on Thursday coincided with GM's announcement the same day that it has chosen several technology companies to outsource up to $15 billion of information technology work over the next five years. Wipro is the only Indian company to be awarded any work in this contract. Last year TCS and Infosys were among five firms that won a $2.2 billion IT outsourcing deal awarded by ABN Amro.

Sudip Banerjee, Wipro's president, enterprise solutions, said in Bangalore his company would be involved in the development and maintenance of middleware - software on which variety of applications work together.

The deal, one of the largest by a single company in the outsourcing area, has been in the making since June 2005 when GM began to scout around for alternative suppliers to Electronic Data Systems Corp (EDS) and includes computing operations and application support for areas such as automotive product development, manufacturing and supply chain, as well as GMAC financial services. It is part of GM's "third wave" of outsourcing and is expected to help the beleaguered automaker, which lost $2.2 billion in the first nine months of 2005, regain lost ground against more nimble Japanese competitors like Toyota.

While names like EDS, HP, IBM and CapGemini have been doing the rounds in the Western press for the past few months, Wipro is a relatively dark horse, even though it has been doing business with GM for many years in the areas of order management and and global supply chain management.

Automotive revenues currently account for nearly 35% of Wipro's $180 million revenues in the manufacturing vertical. The company's current business with GM is in the region of $35 million; Wipro expects to earn additional revenue from the new deal starting Q2 next fiscal.

Speaking of what GM would be seeking in the winners, GM's chief information officer Ralph Szygenda (in an interview with Computerworld in June last year) had put 'competency to help transform General Motors and to work as a team member with other information technology companies' on top. It would not be the lowest price, a point reiterated by Wipro's chief financial officer Suresh Senapathy on Thursday.