TCS Awarded Contract by National Grid

News Source: Nelson Hall Industry Comment

TCS has been awarded an F&A and HR BPO contract by the National Grid in the U.K. The contract has a five year base period, with a two-year extension option.
Services to be provided by TCS include:

- Transactional processing activities covering the areas of purchase to pay, order to cash and record to report

- Payroll and related services.

TCS begins operational work in late summer 2010. Services will be provided by nearly FTEs, with:

- Onshore services, such as helpdesk for payroll, delivered from TCS' center in Peterborough

- Offshore services delivered from Mumbai (HR) and Chennai (F&A).

Analyst comments:
The award is the culmination of a major review, started in 2009, by National Grid of its UK shared services activities. Having already implemented a single SAP back-office system for its U.K businesses, the client is now looking for TCS to achieve a rate of continuous process improvement that it recognized it could not achieve internally.
National Grid used three principal evaluation criteria for selecting a BPO partner:

- Quality of services and solutions, for example

           - The ability to provide an improved customer service experience
           - A focus on continuous improvement with the ability to clearly demonstrate innovation, including proof of additional service opportunities

- Commercial value proposition

- Strategic and partner compatibility.

While it scored highly in all areas, TCS in particular differentiated itself from the competition in the last area.

The contract has a degree of pricing certainty, with fixed price for transaction volume changes and pre-agreed prices for project work, with the flexibility to move to transactional pricing after 12 months. Significantly, the deal structure allows for the potential for process expansion: National Grid is looking to grow its U.K. shared services activities.

TCS' relationship with the client mirrors the company's own evolution as an IT services provider and also illustrates its ability to cross and up-sell into its major accounts. The relationship can be traced back to staff augmentation work back in 1995. Following some Y2k projects in 1998/9, the first managed services agreement was signed in 2000, with a 3-year framework agreement for applications services. This was followed by a 7-year framework agreement in 2003 through which TCS began to provide support for business critical systems. Since 2006 TCS has been involved in a number of business transformation projects and also some co-development initiatives. This latest development in the relationship takes the partnership into BPO.

This is a major BPO award for TCS in Europe, being its largest F&A award in Europe to date, and one which it won against competition from Tier 1 F&A providers.