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TCS close to getting largest e-governance contract, Infosys left behind one more time

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TCS is close to wining the largest e-governance contract. The contract is for digitization of Employee State Insurance Corporation and providing smart cards to 1.5 crore industrial workers. Three companies (Infosys, TCS and Wipro) were in the race. TCS emerged as the lowest bidder. Infosys bid for 2100 crores, Wipro bid for 1890 crores and TCS bid for 1677 crores. If we just look at the numbers the difference is not much. But, when you put crores next to the numbers that makes a huge difference.

1600 core contract in times like these should really be handy. There are few things to look at in this story.

This is the 3rd strategic win for TCS.

  1. TCS bought Citigroup’s BPO for $505 mn.
  2. TCS won the 1000 crore passport contract.
  3. TCS close to winning the largest e-governance contract.

For Infosys, this is the 2nd loss (if you can call that)

  1. Infosys bids for Axon, HCL makes a counter-bid, Infosys did not revise the bid, Axon sold to HCL
  2. Infosys bids for the e-governance contract and loses to TCS by 400+ crores.

In one instance Infosys lost by bidding low and in another Infosys lost by bidding high. Is Infosys not getting its strategy right? Or is it making strategic bids so that its competitors follows and loses in the long-term?In this e-governance project, Infosys might be right in the actual cost. TCS might be underbidding to keep the ball rolling. No one can really know the difference. May be there is something which TCS knows and Infosys doesn’t.

What do you think Infosys’s real strategy is?

  1. johngalt says

    In one instance Infosys lost by bidding low and in another Infosys lost by bidding high. Is Infosys not getting its strategy right?

    The 2 instances are obviously opposite, Sriram. Bid low when you buy and bid high when you sell! how can one conclude that Infy is not getting its strategy right?

    The decision not to give a counter-offer for Axon is looking like a good one! In the current sccenario, where there will be a slash on IT spending, there may not be much business an Axon can bring to justify $600 million cash! HCL was planning to fund this through debt and it is now tough to raise now.

    In the indian services market,TCS has a better cost model (CMC acquisition, lower cost base) than Wipro and Infy. Infy also has a higher operating margin expectation…..they need to learn how to play the indian market and take a couple of deals at lower margins in order to penetrate

  2. JCB FX says

    Well nothing of that sort.Conditions in the market is such that no one would like to lose such big deals that too coming from India where everyone is looking for. And TCS also provides very good work,no doubt in that.

  3. Ajay says

    Hi,
    I am a former employee, and know a little bit about how Infosys prices its bids for its projects. I do not think that losing a couple of deals make their strategy questionable. Infosys always prices its work at a premium and delivers better quality too and does not compromise on operating margins. If the client is looking at short term cost only, then they’d definitely find Infosys’s bids more expensive.
    Ajay

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