Daimler in talks to outsource more work to Indian IT services firms

Company opens new IT shared service centre in Bangalore; to create 800 new jobs

German carmaker Daimler on Monday said that it is negotiating with a few Indian IT services companies for outsourcing opportunities, even though the company said it would slowly rationalise its suppliers’ base globally. 

 

Infosys is presently the biggest IT outsourcing partner for the luxury carmaker in India, a relationship which dates back to early 2000, senior officials of the auto giant said. 

 

“We have various (partners) in India. Infosys of course is one of our biggest partners for long time. We are just in the negotiation phase with few other IT companies for the extended labour what we need for the SAP shared service centre we rolled-out in India,” Michael Gorriz, Chief Information Officer of Daimler AG who is responsible for the IT management within the company told Business Standard. 

 

He however did not disclose the names as the company is “in the middle of the negotiation phase”. The company has around 15 IT services partners in India.
 

Daimler which spends a whopping €600 million every year towards Information Technology has opened a new IT shared service centre in Bangalore within its R&D centre in India, an initiative as a part of its global 'efficiency programme’ which aims at reducing IT spends by €150 million by the end of 2016. The centre, says the company would create around 800 new job opportunities in Bangalore by 2015, and would be primarily responsible for management of SAP and non-SAP systems. 

 

Daimler’s captive R&D centre in Bangalore -- Mercedes-Benz Research & Development India (MBRD) -- presently employs around 1,300 people of which 400 are IT specialists. This is the largest R&D centre for the company outside of its headquarters in Stuttgart.

 

Gorriz also said going forward the company may look at more and more of insourcing to its captive R&D centres globally which would result in a rationalisation its suppliers’ base. However, it would not reduce the number of suppliers (IT outsourcing partners) from India in India.

 

“More than 70% of our annual IT spends happens through the partners. We are partly insourcing the works to our Bangalore centre. There is always a question if we still use Indian suppliers. Absolutely we do. We subcontract from here,” he added.

 

Going forward, he said the company may see the share of insourcing to its captive R&D centres to increase from the present level of 30%.

 

In 2014, the company said the IT budget would grow, but at a conservative rate not exactly at par with the revenue growth, as the focus is more on efficiency drive.

 

“To make our company more efficient, we said the growth in IT spending should be less than the business spends. It is because IT is one function which scales best,” Gorriz added.