IBM grows outsourcing

IBM's key global services outsourcing and consulting unit, which accounts for more than half the company's total revenue, posted strong growth in the second quarter as sales increased 16% year over year to $15.2 billion, reports Information Week.

IBM said its Global Technology Services outsourcing group saw sales increase 15% to $10.1 billion, while sales at its Global Business Services consulting group rose 18% to $5.1 billion.

The value of services contracts signed in the quarter totalled $14.7 billion, up 12% from the previous year, IBM said. The company's backlog of services contracts, as of the end of the second quarter, is worth about $117 billion, $1 billion more than at the same time a year ago.

Software vendor Tech Mahindra has bagged a $700 million outsourcing deal from its largest client and shareholder, the UK-based BT group, for a five-year period, says Business Line.

With this deal, Tech Mahindra will assist the UK-based telecom and broadband conglomerate in transforming its IT infrastructure, said Sanjay Kalra, president of strategic initiatives at Tech Mahindra. The company would also have a backlog of orders worth $2 billion from BT alone, added Kalra.

Tech Mahindra is a joint venture company between BT and the Mahindra group.

India's big three outsourcers - Infosys, Tata Consultancy Services and Wipro - experienced slow revenue or income growth in their recently announced first-quarter results for the period ended 30 June, according to ZDNet.co.uk.

The results contrast with figures in the quarterly index by outsourcing adviser TPI, which show global spending on outsourcing is on track to break records in 2008, with Europe forging the biggest contracts.

All three of the Indian outsourcers blamed challenging global economic conditions, with Infosys warning that the next quarter may continue to be difficult as companies postpone decisions on outsourcing.