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GE rationalises IT services vendors

Vishwanath Kulkarni

Move comes after a gap of 3 years

Pick, drop, renew
GE picked HCL Tech for India, China centres
Discontinued outsourcing pact with MindTree
For most vendors, GE is top client in revenue terms

Bangalore , Sept. 19

General Electric (GE) rationalised its Indian IT services vendors recently by discontinuing some relationships while adding new suppliers.

GE, which is the mainstay for several Indian IT services companies, has resorted to this vendor rationalisation after a gap of three years.

While it selected HCL Technologies as a new vendor to set up and operate its development centres in India and China, it has decided to discontinue its outsourcing engagement with vendors such as MindTree Consulting, whom it had signed up three years ago.

It is believed that GE and MindTree decided to part ways primarily due to the differences in business models.

But GE has renewed its relationships with vendors such as iGATE Global Solutions, Polaris Software and BirlaSoft for another three years effective from January 1, 2007 till end-2009, said sources familiar with the developments.

The renewed deals for these firms come in at more or less the existing rates and the vendors have not seen any significant pricing pressure from the MNC major.

GE has several business units such as plastics, transportation, medical and financial services, among others, which outsource their IT requirements.

For the majority of its Indian vendors, GE is the top client in revenue terms.

It offshores about 80 per cent of its IT requirements and a significant chunk of this is sourced from Indian vendors.

GE has long-standing relationships with Indian vendors such as TCS, Patni and Satyam Computers, among others.

The company has signed up tier II vendors such as BirlaSoft, iGATE and Polaris in a phased manner over the years.

GE is also the top client for TCS, accounting for about four per cent of revenues.

It has a host of master services agreements with TCS, which it keeps renewing at regular intervals.

For iGATE, revenues from GE account for 26 per cent of the revenues, while for Patni revenues from GE account for 15 per cent of overall revenues.

Despite being perceived as client demanding productivity gains from vendor on a year-on-year basis, GE continues to be an attractive customer from the revenue stability and business volumes, analysts said.

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