TCS bags Qantas software deal

Tata Consultancy Services has trumped competitor Satyam in a multi-million dollar outsourcing deal with Qantas, grabbing the lion's share of the $191 million deal. Senior executives from the two Indian firms signed contracts with the airline this afternoon, announcing details of the deals on the Bombay Stock Exchange. TCS picks up $120 million in work, while Satyam's share is worth $71 million. The contracts run for seven years.

The Australian Services Union, which represents the airline's IT staff, said it had not been briefed on the signing. The Qantas contract is understood to be the largest Indian offshoring deal in Australian history. The airline will shift its application development and maintenance work to TCS and Satyam as part of an effort to save it $100 million in legacy costs. TCS has picked up the bulk of the work and will lead the project, while Satyam has announced it will do applications development and maintenance across 150 different applications. TCS will take over support and maintenance of the airline's key operational and commercial systems. "We will lead the transition work for the applications services transformation project," said TCS managing director Rick Marmur. "That includes the maintenance and support of existing applications and ongoing development work."

More than 300 jobs will go to the two Indian firms, with more than 200 to head offshore. The outsourcers are not talking about staff. "We are not in the position to talk specifically about staff, but we will look to recruit locals to assist in the process and if there are people with the skills we need in Qantas then we'd be happy to talk to them," said Mr Marmur. "We have job opportunities, not just within Qantas, where we are always looking for talented staff." The deal has infuriated unions, which maintain Australia has the resources it needs to do the work onshore. "What they're saying is `your skills at $100 a week is not what we want to pay'," said Australian Services Union assistant national secretary Linda White. The deal will take a chunk out of Qantas' traditionally large IT shop, currently sitting at 830 staff. But the union had not been briefed on the detail, Ms White said. "They're shifting everything to India so why not leave the news to India too," she said. "In their minds they're already offshore."

Qantas runs more than 700 applications, many in legacy languages like Cobol and C++, which are expensive to maintain and restrict the deployment of new online services. Legacy work has traditionally been a strong point for Indian firms, which have plenty of trained workers available at a lower cost than in developed nations. The airline has already moved to outsource reservations, dumping its in-house system in 2004 in favour of a hosted application from Amadeus. The same year it signed a $1.4 billion, 10-year deal with IBM and Telstra to outsource its voice and data networks.

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