TCS, Infy, Wipro among those that have bagged a five-year deal. Ending a long drought of major outsourcing deals, especially from the recession-struck UK, Indian IT majors Tata Consultancy Services (TCS), Infosys Technologies and Wipro Ltd, besides global IT giants IBM and Accenture, have bagged a five-year $1.5-billion outsourcing deal from BP (British Petroleum), the world’s third-largest petroleum refining company in the world.

BP told Business Standard that it chosen six partners in all for its $1.5-billion contract from among 40 suppliers “...who had, between them, 82 contracts”.
“We carried out a 12-month tender process looking at potential partners and those we work with... We feel the six contractors we have chosen have the scale and global reach to meet our IT demands,” said a BP spokesperson, adding that the company had issued a tender of around $2 billion (over five years) of projected third-party spend.

While BP did not comment on individual deals, it is understood that each of these players received outsourcing contracts worth $100 million (around Rs 490 crore) from BP. The company, said the spokesperson, will manage to save around $500 million (around Rs 2,450 crore) over five years because of these part deals. TCS, Infosys, Wipro and Satyam (rebranded Mahindra Satyam) have been BP’s four largest outsourcing partners. The petroleum major is also among the top 10 clients for TCS, Wipro and Mahindra Satyam, whereas is one of the top 20 customers for Infosys.

Among the contracts that each of these firms have bagged, Infosys will manage integrated supply & trading and exploration & production businesses, and operate a large portion of business systems for BP. TCS has been selected for engagements in refining, manufacturing and corporate IT with opportunities across the Fuels Value Chain, including upstream and trading processes. Wipro, on its part, will provide IT Applications Development and Maintenance (ADM) services for BP’s Fuels Value Chain and corporate businesses globally. “This announcement is in line with BP’s outsourcing strategy. BP has been a strong offshore services user for five to seven years. So far, around 2,000 jobs have been outsourced to India,” said Sudin Apte, senior analyst, Forrester Research.

Over the last 12 months, BP has undertaken a programme to consolidate its IT vendors for ADM work. BP was working with about 30 suppliers for this, including IBM, Accenture, Mahindra Satyam (erstwhile Satyam) and Infosys, who were all in the fray for the contract other than TCS and Wipro. “Vendor risk diversification has become quite important with scams in the recent past — clients tend to diversify their outsourcing contracts across the top vendors in order to reduce exposure and risk concentration to one vendor,” said Sabyasachi Satpathy, Partner, Tholons.

 Mr. Anand Sharma, the Union Commerce and Industries Minister announced that the forth coming Foreign Trade Policy (FTP) would underline the sensitive of the Govt. towards issues of employment and would focus on helping labour intensive export sectors such as agriculture, textiles, leather, gems and jewellery. He stated that the traditional approach of FTP which was focused largely on fiscal incentives would be replaced by holistic policy perspective which would strengthen the industry. He also informed that procedural bottlenecks, which impede efficiency and increase trade transaction costs for exports, would be done away with. Govt. is planning to set up a inter ministerial task force to oversee the implementation of the FTP and also to convene a meeting of Inter State Trade Council   to bring about the closer interaction between the central and the state.

Government of India placed in the public domain the proposed new direct tax code, on 12 August, thus fulfilling the promise which was made by the Finance Minister in his budget speech, when he announced that this code will be put up for public debate within 45 days. This code would replace the existing Income Tax Act, which would be completing its “Golden Jubilee”in 2011. The main features of the draft code are as follows:

• Limit for deduction of savings for individuals to be increased to Rs. 300,000 from Rs. 100,000
• Concept of previous year and assessment year to be replaced by a unified concept of financial year
• MAT will be a final tax –not allowed to be carried forward for claiming tax credit in subsequent years
• Taxation of capital gains to be rationalised
• General anti-avoidance rule to be introduced
• New tax regime for all trusts and institutions carrying on charitable activities
• Residence based taxation to be made applicable for residents and source based taxation for non residents
• Tax rates for individuals and businesses to be moderated
• All profit linked tax incentives to be substituted by investment linked incentives
• All area based exemptions to be withdrawn
• Advance pricing agreements to be introduced
• Foreign companies will have to pay branch profit tax at 15 %

The empowered group of ministers has fixed a base price of 35 billion for PAN India 3 G spectrum and Rs. 17.5 billion for PAN India WiMax (wireless internet spectrum). It is expected that Govt. would raise revenues in excess of Rs. 250 billion from the auction of the 3G and Wimax Spectrum. Govt has also decided that the spectrum would be given to a maximum of 5 players initially, out of which one would have to be given to BSNL or MTNL. The Telecom Ministry would announce the details of the auction for the remaining four slots.