TCS secures $200 mn four-yr deal in Mexico

Mumbai-based IT services provider Tata Consultancy Services (TCS) has signed a four-year, $200 million (around Rs 800 crore) contract with the Social Security Institute of Mexico (IMSS) "" one of its biggest deals and its first government contract in the region.

With this deal, the value of its multi-million dollar deals signed over the past one year amounts to slightly over $2 billion (around Rs 7,850 crore).

With over 370,000 employees and providing coverage to over 50 million Mexican citizens, IMSS is the largest organisation of its kind in Latin America.

TCS will provide end-to-end IT services, including application maintenance and support, custom software development, business analysis services, management of strategic IT programs and value-added initiatives for the organisation's affiliates. 
 

GAINING GROUND
Company	Deal size	Date
Social Security Institute of Mexico	$200 mn	Nov 2007
Netherland-based Neilsen	$1.5 bn	Oct 2007
BSNL	$140 mn (Rs 574cr)	Aug 2007
Australia-based AGL Energy	$16 million	Aug 2007
United Biscuits (UB)	NA	Dec 2006
UK-based Somerfield	$65 mn	Nov 2006
Qantas	$90 mn	Nov 2006

"This agreement with IMSS is the largest deal for us to date in Latin America, coming after similar large engagements we have won in recent years with ABN Amro bank in Brazil, Registro Civil in Chile and Banco Pichincha in Ecuador. It consolidates our position as the IT partner of choice for major Latin American organisations and also marks our emergence as a key player in the Mexican technology sector," said Gabriel T Rozman, president of TCS Iberoamerica.

With increasing demand for IT and BPO services in Latin America, the opportunities for job creation in this sector are immense, but the supply of trained manpower could serve as a barrier to growth.

Realising this, the company had announced the setting up of a regional training centre for Latin America established in the Knowledge Development Center (KDC), which is hosted by the Uruguayan technology lab (LATU).

The TCS training centre based in Montevideo, Uruguay, will serve as a training platform to upgrade the technology skills of the firm's employees across Argentina, Brazil, Chile, Colombia, Mexico, Uruguay and other countries in the region.

TCS invests more than 6 per cent of its annual revenues in training and will bring in experts to serve as faculty in its Latin America Training Center. The centre is also expected to give a boost to the local software industry in Uruguay and help promote technology careers and jobs in the country.

Earlier, the company had mentioned that it planned to make Latin America its biggest base after India. Currently, Iberoamerica (Latin America, Spain & Portugal) contributes 4.2 per cent to the revenues of the company.

In terms of workforce, Brazil constitutes 15 per cent, Chile 19 per cent and Mexico 2 per cent. Iberoamerica has over 5,000 local employees, 150 active clients and large centres in Brazil, Chile, Ecuador, Mexico and Uruguay.

The company has been consolidating its presence in the region. For instance, earlier this year TCS gained complete control of the Brazil-based joint venture company 'TCS do Brasil' by acquiring its partner group TBA's 49 per cent stake for a consideration of $ 33.4 million. TCS do Brasil recorded a top line of $ 66.5 million for the year ended March 31, 2007 and has over 1,700 employees.

Moreover, TCS expanded its operations in Mexico by launching a global delivery centre in the city of Guadalajara with plans to hire over 500 professionals in the short term.

N Chandrasekaran, Executive Director and Chief Operating Officer of Tata Consultancy Services, said: "Mexico is emerging as a key market for TCS in Latin America. As the strategic technology partner for the Government of Mexico's social security organisation, TCS will bring in global best practices and benchmark standards to ensure excellence in service quality and performance, allowing them in turn to better serve the citizens of Mexico."

TCS has signed an outsourcing solutions agreement valued at over $140 million over a period of five years with Banco Pichincha, Ecuador's largest private bank.

TCS, however, is not the only company which is diversifying in South America. Indian information technology companies are venturing into diverse geographies "" from Brazil to Ecuador.

Along the way, they are diversifying their revenue streams, addressing niche segments, from finance and accounting to engineering, telecom, infrastructure and government, and deepening their presence in markets outside the US.