Bank Of America Billion Dollar IT Contract Sets Up Battle Between Indian And Global IT Vendors
With business of about a billion dollars up for grabs, intense competition is expected between Indian and global IT vendors for Bank of America (BAC)'s core IT outsourcing contract.
With almost billions of dollars of IT contracts up for grabs, one should expect a fierce competition amongst Indian and global IT vendors to get a slice of Bank of America (NYSE:BAC) core IT outsourcing contract. The US investment banking firm has recently floated an invitation for proposal seeking IT vendors for the refurbishment of its IT product systems. The proposal is likely to trigger a fresh price war amongst incumbents, such as TCS, Infosys, and Accenture amongst several other IT companies around the world.
Bank of America is currently calling for a rebid of its core IT services in areas, such as testing and infrastructure management services (IMS) and application development and maintenance (ADM). When Times Of India (TOI), who first broke the story, approached to Mark Pipitone, Corporate Communications Senior Vice President of BAC, and was contacted, he refused to comment on vendor relationships, as part of company confidentiality policies to not disclose information.
Based on information from an insider, BAC contracts out at least $250 million and $250-$275 million respectively to Infosys and TCS, whereas Accenture rakes in 300 million of business from the Charlotte based financial institution. Other IT vendors include HP, Polaris, and Aon Hewitt.
IT industry expert, Siddharth Pai, says that it is natural to expect some portion of contracts to be allocated to non-incumbents during every rebid for winning new market share. Phil Fersht seconds Siddhart’s opinion and expects the rebid process to be hypercompetitive, leaving the bank with choices at hand.
The deals that are coming up for renewal have a substantial infrastructure to them, since most of them involve huge, if not complex legacy systems, which are in need of modernization given their lifecycle, and the bugs that must be fixed to keep the system not only running, but also efficient.
According to London based IT research firm, Ovum, contracts are estimated to be worth around $13 billion this year, and includes the General Motors contract that was awarded to ADM, IMS, and SI in 2011 and which is up for newel this year.
Peter Bendor-Samuel, CEO of US-based Everest Group, has a feeling that the decision by Bank of America’s decision to rebid its ADM and other related infrastructure is not only significant, but also an indication of the growing change in the IT sector globally. This can have huge implications in terms of price and margins. Bank of America’s stock price ended the day at $17.11, a gain of more than 0.56% the previous day.