HCL Tech wins $350-m deal from Reader’s Digest

7-year outsourcing contract covers IT infrastructure to applications.

HCL Technologies has bagged a $350-million IT outsourcing services order from The Reader’s Digest Association Inc (RDA).
The contract is spread over a seven-year period and translates into an annualised run rate of $50 million. HCL said that revenue from the new contract would kick-in from the first quarter of the next fiscal beginning July 2009.
As part of the deal, HCL would also take over some employees of RDA on its rolls. However, the company did not respond to an e-mail on how many employees would be taken over and from which functions.
The order covers RDA’s entire IT landscape from IT Infrastructure to applications. This includes applications development and infrastructure support across the applications stack of Oracle Universe, Open Technologies and Mainframe, Infrastructure support for network, security, storage, end user computing and Data Centres (DC) including disaster recovery services.
“The scope also includes DC and application portfolio optimisation to consolidate applications globally and refreshing of legacy assets to modernise RDA’s IT environment. As part of this engagement HCL will also rebuild and migrate RDA’s mainframe environment in its New Jersey Data centre facility,” an HCL statement said.
Additionally, HCL would implement tools framework to provide real-time visibility into the health of the IT environment. HCL said that this global solution is enabled through an Integrated Helpdesk in 14 global languages of Portuguese, French, Russian, Czech, Spanish, Polish, Finnish, German, Hungarian, Bulgarian, Chinese, Romanian, Slovak and Turkish. These will be supported across 45 countries through its global delivery locations in Poland, US and India.
HCL said it would also be taking over several existing IT contracts from RDA and would manage them over a period. This will also involve providing Telecom Expense Management Services for its worldwide network through HCL’s ControlPoint solution (HCL had acquired ControlPoint solution in 2008) providing the company another significant cost reduction avenue.Outsourcing worries
The deal assumes significance as it comes at a time when globally IT budgets have come under tremendous pressure. Adding to the woes of the Indian IT industry is the anti-outsourcing rumbling in the US. The US President, Mr Barack Obama, recently talked about ending tax breaks for American companies that move jobs to offshore locations.
HCL’s latest contract seems to have bucked the slowdown affecting the industry. Other similar contracts announced recently include TCS’ multi-year contract from Ducati, the Italian super bike major in Europe, to deploy ERP solutions; TCS also bagged a $100-million order from Phones 4U of UK earlier this year.
Source: HBL