Intel, the world’s biggest chipmaker, has awarded a pilot outsourcing contract to Infosys Technologies worth USD10 million currently, which Top Indian outsourcing cos could evolve into a USD100-million engagement for India’s second biggest software exporter that is seeking to grow its revenues from customers such as BP (British Petroleum ), Intel and Telstra. Intel is not alone in pursuing outsourcing contracts with Indian offshore companies. In April this year, world’s biggest software firm Microsoft announced a five-year, USD170-million outsourcing contract with HCL Technologies for supporting its online services business.
Large technology companies including Intel and Cisco are under tremendous pressure to reduce operational costs, and outsourcing of non-core activities can result up to 20-30 % savings.
Intel is not entirely new to outsourcing either, the chipmaker, almost a decade ago, outsourced its entire desktop management function. “And since then has been identifying newer processes to be outsourced including application development , maintenance and back office,”
“Technology customers are savvy outsourcers — it’s the next biggest segment after financial services. Cisco for instance, outsources over USD150-million worth of projects every year to India,” said a senior executive at a top Indian tech firm, which counts Cisco among its customers.
Intel on its part, has been attempting to reduce operational costs by trimming payroll and other efficiency measures. Addressing financial investors earlier this year, Intel president and chief executive officer Paul S Otellini said that his company will have around 78,000 employees globally by the end of this year, down from around 1,03,000 professionals the company employed three years ago. Intel aims to save around USD700 million in operational expenditure this year alone.
In a year when Infosys is seeing revenues from its top customer BT (British Telecom) decline by around USD100 million, newer contracts such as these will help the company reduce its dependence on troubled contracts and keep in line with growth projections. Infosys reported a 2.9% sequential fall in income to Rs 5,472 crore for the quarter ended June 2009.
Large technology companies including Intel and Cisco are under tremendous pressure to reduce operational costs. Intel has been attempting to reduce operational costs by trimming payroll and other efficiency measures.
Intel aims to save around USD700 m in operational expenditure this year alone.