Wipro gets 5-year $300 million order from General Motors
03 Feb 2006
General Motors has announced that it will outsource most of the information technology-related work to a group of IT service companies for the next five years. The US auto major said it has concluded 5-year contracts with service vendors including Wipro. No other Indian IT services company has received any orders from GM.
Though it was not directly disclosed by GM, top officials at Wipro later said the company expects revenues of around $300 million over this period from the new contract. Wipro would remain a strategic technology partner for GM and would handle middleware development and maintenance.
Wipro said it would increase the number of people working on the GM project to around 1,000. The company expects revenues from the new orders to start flowing from the quarter ending September 2006.
The order is significant for the Indian IT services industry as major Indian companies are now winning parts of large contracts directly from customers. TCS and Infosys had earlier won significantly large parts of a more than $2 billion order from European banking major ABN Amro.
GM said it would spend close to $15 billion on information technology over the next five years in an effort to cut costs. Most of these orders would go to large system integrators like EDS and IBM while companies like Wipro would get smaller chunks. Contracts for about half of the total expected IT spend by GM are understood to have been concluded yesterday.
The GM contract is the largest commercial contract in the history of the IT services industry. IT services company EDS is the current vendor for GM under an agreement which is expiring this year. GM has gone in for a multiple-vendor outsourcing model as against its existing single vendor model.
EDS would continue to be the largest vendor for GM as the company has cornered orders worth $3.8 billion over the next five years. Other major gainers include IBM, HP and consulting firm Cap Gemini.
Wipro closed at Rs527.4 (up 1 per cent) on the NSE yesterday.