ExxonMobil in talks with local vendors for $1billion IT contracts

BANGALORE: World’s biggest oil company ExxonMobil is in talks with India’s top technology firms and multinational vendors for outsourcing of several IT contracts worth up to $1 billion. A day after British Petroleum (BP) formally awarded over $1.5-billion outsourcing contracts to TCS, Infosys and Wipro along with IBM and Accenture, top Indian offshore vendors including L&T Infotech and HCL Technologies - along with other MNC vendors - have locked horns with each other for almost $1-billion outsourcing deal being fleshed out by ExxonMobil. In a year where large outsourcing customers are seeking to reduce their operational costs by up to 30%, Indian technology firms are set to gain from increased offshoring of application development, maintenance and support. “The discussions are at an early stage. However, ExxonMobil wants to work with fewer, large and medium-sized vendors at lower rates,” said a US-based person familiar with ExxonMobil’s outsourcing strategy. He requested anonymity because he is not authorised to speak with media. Exxon runs on SAP platform across the company’s chemical and oil businesses spread over 200 countries with nearly 80,000 employees. Large oil, gas and utility firms such as Royal Dutch Shell, Chevron, ExxonMobil and BP run their business processes powered by complex ERP software from SAP and Oracle. At a time when their operational and functional heads are demanding lower operational costs, outsourcing and offshoring of ERP maintenance and support is gaining momentum. Research firm Gartner says the economic turbulence is a major catalyst for outsourcing of ERP systems and services. For instance, BP expects to save $500 million over five years by reducing the number of its suppliers to five from around 40 and sending more projects to be delivered from cheaper offshore locations such as India.