Mar 28, 2013, 10.19 AM | Source: CNBC-TV18

JLR may rework 2 outsourcing contracts with TCS: Sources

The Tata Motors owned-Jaguar Land Rover is likely to rework two outsourcing contracts given to fellow Tata Group company Tata Consultancy Services.

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The Tata Motors owned-Jaguar Land Rover is likely to rework two outsourcing contracts given to fellow Tata Group company Tata Consultancy Services , Sources told CNBC-TV18 that the contracts are up for renewal in 2015 and hence JLR may seek some prior tweaking of the contracts.

The move is part of JLR's efforts to realign and refocus it's automotive services and the said contracts may be tweaked to include strategic management consulting and application development.

JLR had outsourced bulk of its in house information technology work to the India's largest software company. TCS has so far received a total business of USD 10 million from the Tata Motors' subsidiary.

Also read: TCS wins USD 43 m contract from Norway Post

The sources however indicated that JLR has an option to completely exit from the said contracts. TCS had received bulk of information technology contracts from JLR over last six months. 

It must be noted that for years, TCS had been losing out on lucrative outsourcing contracts from Tata group companies to IBM, one of the world’s biggest computer service company. 

According to Mint newspaper, in October TCS had won fresh outsourcing business worth  USD 385 million (Rs.2,040 crore) from Tata Motors Ltd and Jaguar Land Rover. Tata Motors has been moving IT projects from IBM to TCS as part of a bigger exercise to consolidate its IT operations with a single vendor.

If JLR decides to completely exit from the said contracts, then it may come up as big blow for Mumbai-based IT company.

When contracted JLR informed CNBC-TV18 that the company continuously reviews supplier contracts and purchasing decisions on regular basis for business efficiencies. However it denied to make any further comments on the matter.

TCS provides range of technology solutions for automobile sector which includes shop floor to retail integration, solutions for entire supply chain and intelligence solutions for driving business value. 

Tata Motors stock price

On November 27, 2015, Tata Motors closed at Rs 417.55, down Rs 5.6, or 1.32 percent. The 52-week high of the share was Rs 612.05 and the 52-week low was Rs 279.15.

The latest book value of the company is Rs 78.55 per share. At current value, the price-to-book value of the company was 5.32.

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