The
India-based outsourcing firm won a multiyear, multimillion-dollar contract to
provide the struggling American automaker with IT support and services.
Tata
Consultancy Services, a subsidiary of the multibillion-dollar India-based Tata
Group, won a major contract to provide IT services to struggling American
automaker Chrysler.
In an
announcement made this week, Tata said it would provide the third-largest
U.S. automaker with a “comprehensive
portfolio of IT services.” Services include IT maintenance and application
support, particularly for Chrylser’s sales, marketing and shared services
divisions. While official figures on the value or scope of the deal were not
released, the multiyear contract is estimated to be worth tens of millions of
dollars.
“This
growing trusted partnership is a testament to TCS’ competencies and
capabilities which continue to help the customer in its business transformation
by providing innovative IT services scalable to their needs,” said N.
Chandrasekaran, executive director and chief operating officer of Tata
Consultancy Services, in a statement. “The expertise and in-depth knowledge of
the automotive industry and Chrysler’s business, coupled with our ability to
deliver certainty of results will provide sustained value to Chrysler.”
Chrysler
was not available for comment, and Tata declined to provide more specifics on
the contract. Neither firm would comment on whether the deal will affect
Chrysler jobs or result in cost savings for the carmaker.
IT
outsourcing is a growing trend among multinational enterprises. Several major
Global 2000 companies have announced IT outsourcing initiatives to shave
operation costs and gain access to IT talent. In January, Royal Dutch Shell
announced it would outsource most of its IT operations in an effort to save
more than $500 million annually. When the deal is initiated in June, Shell is
expected to layoff up to 90 percent—or 3,200 people—of its global IT staff.
Ironically,
Tata Consultancy Services is a sister division to Tata Motors, a company that
will compete in
India—and potentially other parts of
the world—with Chrysler. Tata Motors will introduce its Nano subcompact sedan
this year, a car that will retail for $2,500. The Nano is designed to provide
affordable, no-frills transportation to the burgeoning middle class in
India, a country with a population of
more than 1.1 billion.
Tata
Consultancy Services is no stranger to the global automotive industry. More
than 15 percent of its $4.3 billion in annual revenue comes from services
provides to auto manufacturers. The company says it provides product
development, manufacturing, supply chain and customer service support for most
of the
North
America,
Japan and
Europe automakers and their tier-one suppliers.
Chrysler was spun off as a privately held
company last year when the venture capital firm Cerberus bought the automaker
from Daimler for nearly $7 billion. The acquisition ended a 10-year
relationship between the parent company of Mercedes-Benz and its struggling
American counterpart, which ended up costing the German company nearly $30
billion in lost equity.