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USD 100M contract to TCS from TDC Denmark

Consolidates its position as one of the biggest IT service-providers in Nordic region

Tata Consultancy Services is consolidating its position as one of the biggest IT service-providers in the Nordic region. The company has bagged a multi-year deal from Denmark’s largest telecommunications firm TDC, replacing incumbent CSC.

Though the exact value of the deal is not known, it is likely to be worth over $100 million. TDC is one of CSC’s largest private sector clients in the region and its 2008 contract with the telecom firm was worth over $400 million. TCS will provide IT operations and maintenance services to TDC, a person familiar with the matter said. A TCS spokesperson said the company could not comment on client situations, while email queries to CSC and TDC went unanswered. Sources said, the project to manage the DKK 26.17-billion company’s IT services, will go on stream in April.

European companies have traditionally been reluctant to outsource, keeping their IT functions and jobs in house despite attempts by Indian IT firms for many years to gain entry. Last year, however, the number of contracts being handed out by large corporates in these countries increased significantly as reducing costs and gaining competitive advantage became crucial in a slowing market. For Indian IT firms, Europe represents the next big opportunity after the US from where they get a majority of their revenues at present. Most Indian firms get 20-30% of their revenues from Europe at present and they have been investing in the region to increase their presence and client engagement.

Industry experts say TDC is likely to have chosen TCS over CSC as the Indian firm has been able to outperform in its Nordic contracts and build a reputation for itself in the region.

“TCS has excellent Nordic client references and the highest customer satisfaction among all IT services firms in the region. Projects with TCS have gone much better than expected in five critical performance dimensions: clients have spent less than budgeted; delivery quality has been better than with previous suppliers; there have been fewer contract disputes and TCS has been able to take on more complex tasks than previous suppliers,” Peter Schumacher, CEO of Germany-based business advisory services provider Value Leadership Group said. As part of the deal, TCS is also likely to taken on some of TDC’s staff. Indian IT firms often take some of the client’s staff as part of European deals.