Tata Consultancy Services Ltd, India's top software services exporter, said on Thursday it had signed a contract with Nielsen Co worth $1.2 billion, sending its shares up nearly 2 percent.
The 10-year deal to provide IT and business services to the information and media company's worldwide operations has been arranged to protect Tata's margins from exchange rate swings and inflation, Chief Operating Officer N. Chandrasekaran said.
India's large pool of English-speaking workers and relatively low wages have helped software services companies grab large outsourcing deals from Western companies looking to cut their costs.
Telecoms software firm Tech Mahindra last year bagged a five-year $1 billion deal from British Telecoms group BT.
But a 12 percent rise in the rupee against the dollar this year has squeezed the profit margins of software services firms that get revenue from the United States.
The deal has been structured in such a way that it completely protects our margins, Chandrasekaran told a news conference, adding both parties had the option to review the deal at the end of the fifth year.
He said the revenues from the contract will kick in this quarter.
Nielsen Co provides television and Internet audience measurement services and research for the consumer goods and retail industry. The company has headquarters in the Netherlands and New York.
This arrangement will help us streamline and simplify our IT infrastructure and application platforms and operational practices, Mitchell Habib, executive vice president in charge of Nielsen Global Business Services, said in a statement.
It will give us much greater flexibility to respond quickly to changes in the marketplace, he said.
Tata Consultancy, part of India's Tata Group that has diverse interests including steel and cars, will also handle some of Nielsen's finance and human resource business process.
This is a big positive for TCS, said Harit Shah, a Mumbai-based IT analyst with Angel Broking. It seems like their full services strategy has been working well and it will help them to get more complex deals in future.
Shares in Tata Consultancy, which has a market value of more than $27 billion, climbed nearly 5 percent to 1,149.50 rupees -- its highest in more than nine weeks -- before ending up 1.8 percent.
Tata Consultancy, whose clients include General Electric and ABN AMRO, has said it is pursuing about 20 large deals.
It competes with smaller rivals such as Infosys Technologies and Wipro as well as multinational firms like IBM for outsourcing deals.