Wipro Lands $500 Million Outsourcing Deal

Indian IT services provider Wipro reportedly won a large $500 million-plus outsourcing service contract from U.S. banking giant Citigroup.

There were several top technology outsourcing providers bidding for the contract, but Wipro won the deal, reports Times of India, citing unnamed sources.

Citigroup had invited bids for $1 billion contract, garnering high-profile bidders such TCS, HCL, Infosys, Wipro, Cognizant, IBM, Accenture and Dell. The news comes at a time Indian outsourcing service is undergoing a bad patch.

As part of the deal, Wipro will launch a new delivery center in India’s southern city of Bangalore, the so-called outsourcing capital. The five-year contract requires the Indian IT company to provide application development, maintenance and infrastructure services for Citigroup’s global operations.

According to Indian media reports, larger corporate houses in the U.S. and Europe are cutting back on IT spending and are increasingly looking for smaller service providers in an attempt to reduce their dependency on a single large outsourcer.

U.S. financial firms have long been major clients for Indian outsourcing companies, and they account for nearly 40% of the contracts India Inc wins every year.

The last time Wipro won a contract from Citi was in 2008 when it bought Citi’s subsidiary Citi Technology Service for $127 million.

Like its domestic competitors, Wipro is hunting for larger outsourcing contracts in the U.S., but the number of contracts has been reduced drastically over the past year leaving many outsourcing companies scrambling to sustain their business.

In 2010, Wipro wrapped up a deal to take over the operations and management of Citi’s data centre in Meerbusch, Germany.

Two years ago, another Indian firm TCS had won a $505 million outsourcing contract from Citigroup to handle their core back office processes and customer transactions.