TCS, Wipro eye UK cloud computing deal

The project involves building a network around a dozen secured centres, each priced at £250 mn.

Indian Information Technology (IT) companies Tata Consultancy Services (TCS) and Wipro are among the 37 global organisations, including IBM and HP, vying for the UK government’s cloud computing project.

Cloud is a metaphor for internet, and the project also involves building a dozen secured data centres, each priced at £250 million. Out of the total project, the cloud component alone is valued at £300 million, or Rs 2,200 crore.

Currently, the UK central government, along with its police forces and local authorities, use 500 data centres. The government alone operates 130 data centres, which it plans to reduce to 10-12. The effort, it is said, will reduce the government’s IT infrastructure cost by £300 million every year.

“We are in the final phase of designing the cloud project. We have 37 organisations across the globe to design the infrastructure for us. It is being done for free by the firms and there are Indian companies involved in it,” said John Suffolk, the UK government’s CIO.

The cloud project is the key enabler for the UK government’s £3.2 billion of savings every year outlined in the “Operational Efficiency Programme”. Once ready, it will provide a single access point for information and communication technology (ICT) services, applications and assets of the government. Suffolk said the design would be ready in a few weeks and tenders would be floated this year itself. “It might get a little delayed as we have the elections as well,” he said.

“Under the auspices of ‘Intellect’ (a trade body representing the UK technology industry), Wipro is working with major IT players to support the government’s strategic assessment of cloud computing potential to reduce costs and improve services. Within a multi-strand programme of work, Wipro is contributing to the business case and service delivery aspects of the study, deploying its own experience of developing an internal cloud approach,” said Geoff Llewellyn, director of UK Public Sector, Wipro Technologies.

For both TCS and Wipro, the UK is an important market. In Europe, the UK is the only country that embraced outsourcing and offshoring quite early. Europe’s contribution to TCS’ revenue was 26.4 per cent for the quarter ended December 31, 2009, of which 16 per cent was from the UK. For Wipro, Europe contributed 21 per cent.

TCS is also among three companies that would handle the UK’s $1.7 billion child maintenance and enforcement commission. “It is unlikely that any one vendor will win the whole programme. Indian IT players have made a dent into the UK government projects in services, but so far it has been only applications development and maintenance. This will be a significant opportunity for them to diversify,” said Vikram Gulati, director, Quantum Step — a sourcing advisory firm headquatered in the UK.

Analysts expect Indian vendors to corner 5-10 per cent of the value of the programme. The country is also setting up the Government Applications Store (G-AS). The idea behind it is to open up the UK government’s products and services for the public. This alone is expected to help the UK save £500 million every year.

Apart from the biggest spender on IT in the UK, the government is also an early adopter of IT outsourcing. The IT budget of the government is close to £8 billion annually. Close to 65 per cent of this, according to Suffolk, gets outsourced to third party service providers.