Multinational Citibank may launch a 10-year IT outsourcing contract worth USD 1 billion and is likely to mandate a 90 percent onsite requirement for the contract, indicating a decline in offshoring trend, reports CNBC-TV18‘s Kritika Saxena quoting sources.
Multinational Citibank may launch a 10-year IT outsourcing contract worth USD 1 billion and is likely to mandate a 90 percent onsite requirement for the contract, indicating a decline in offshoring trend, reports CNBC-TV18's Kritika Saxena quoting sources.
The contract will entail application development, analytics and mobility services for the bank's global operations. Biding for the contract has already begun and players like TCS, HCL Technologies, Infosys, Wipro, and Cognizant have put in their bids. Global players like IBM, Accenture and Dell are also involved in the race.
Citibank is likely to announce the name of contract winner in July-August.
Interestingly, Citi Bank has mandated 90 percent onsite requirement for the contract, which essentially means that 90 percent of the employees for the contract would be hired locally. Only 10 percent can be hired offshore or from India, mainly for front end work. While this has been happening in case of UK government contracts, a large financial player for the first time has put up such condition.
Typically, the average ratio for a financial services contract is around 50:50, thus equally divided between offshore and onsite. Essentially, this contract is indicating a trend where offshoring is gradually disappearing and increased amount of local hiring is taking place, which of course will increase cost for Indian IT companies and immediately impact their margins.
Indian companies have been aware of the change in customer's preferences in the last three years. Different companies have also changed their overall mix, but going forward, this would remain a concern considering that it can also be adopted by other banks and other sectors as well.