When Tata Consultancy Services (TCS) announced that it\n would sign a $1.2 billion IT services contract with The Nielsen Company on Oct. 18, the outsourcing world was\n atwitter with talk of what this\u2014presumably the first\n major Indian megadeal\u2014says about the future of IT\n services. Is it a breakthrough for TCS? Are more\n billion-dollar deals on the way for Indian providers? Are\n the IBMs and Accentures of the world losing ground?\n MORE ON CIO.com\n \n Nielsen's Mitchell Habib on Leading Change\n \n Seven Reasons to Outsource to India\n \n Eight Reasons Not to Outsource to India\n \n How Do You Get Outsourcers to Innovate?\n But the deal may actually reveal more about the outsourcing\n customer, Nielsen, and its IT leader, Mitchell Habib, than it\n does about the larger outsourcing industry. Habib is an IT\n executive who prides himself on assessing business conditions\n and leading organizational change with all deliberate\n speed.\u201cNielsen is moving quickly to transform an outstanding\n group of operating businesses into an integrated,\n market-focused organization that delivers high-value\n information services to our clients,\u201d said Habib,\n executive vice president in charge of Nielsen Global Business\n Services, in a statement. \u201cThis arrangement with TCS will\n help us streamline and simplify our IT infrastructure and\n application platforms and operational practices across our\n businesses, support the development of integrated solutions and\n give us much greater flexibility to respond quickly to changes\n in the marketplace.\u201dOn the face of it, the $1.2 billion deal is sizable and\n falls under the generally accepted parameters of an outsourcing\n \u201cmegadeal\u201d ($1 billion or more). But that total\n contract value is actually spread out over a decade in this\n case.\u201cThis could be the largest single contract out of\n India,\u201d said Dean Davison, vice president of research for\n NeoIT. \u201cBut part of the \u2018game of perception\u2019\n that is being played is that this is a 10-year deal, making the\n annual value about $120 million. While any service\n provider would love to have that size of a contract, it does\n not make it quite as special.\u201dTCS isn\u2019t breaking any rules by touting this as a\n breakthrough. The company simply has adopted another one of the\n tricks utilized for years by its U.S.-based rivals like IBM and\n EDS. A $10 billion dollar deal sounds quite impressive, says\n Davison, less so when you read the fine print.One reason the Nielsen-TCS deal is so large, however, is\n because its scope goes beyond IT services to include business\n process outsourcing (BPO) and knowledge process outsourcing\n (KPO). According to its announcement, TCS will help Nielsen\n integrate and centralize multiple systems, technologies and\n processes globally, and assume responsibility for certain\n finance and human resource business processes, which will be\n executed on new BPO platforms built by TCS. The vendor will\n also set up an \u201cinnovation lab\u201d for Nielsen to help\n it \u201cconceptualize the next generation of business\n solutions for its end-clients,\u201d says a TCS\n spokeswoman.Now that\u2019s a big deal. \u201cAnalytics is a huge part\n of Nielsen\u2019s solution,\u201d Davison said in an e-mail\n message. \u201cThis deal moves a lot of that analytic function\n to India via TCS and should drive the capabilities up (throw\n more people at the same problem for the same cost) or drive\n costs down (the traditional offshore value\n proposition).\u201dIt\u2019s also the kind of nearly \u201cend-to-end\u201d\n deal that used to go to IBM, EDS, CSC and the like, that Indian\n providers like TCS and Wipro say they want to win.Outsourcing Megadeals Not the Rage They Once WereBut outsourcing analysts don\u2019t anticipate a rash of\n billion-dollar-plus deal announcements out of top-tier Indian\n outsourcers. Growth in the number of big, soup-to-nuts deals\n overall has slowed, and some reports indicate that those that\n are getting signed are decreasing in value. (See "U.S. Appetite for Outsourcing Deals Slowing Down"). \u201cThere aren\u2019t more billion-dollar\n offshore deals because the number of billion-dollar\n deals overall is decreasing,\u201d says Gartner Research\n Director Dane Anderson. \u201cOrganizations are chunking\n things down into more digestible pieces.\u201d It\u2019s\n likely that major offshore players will make inroads into\n future megadeals, says Anderson, but they\u2019ll \u201cbe\n fewer and farther between.\u201dHad anyone wanted to put money on what customer might be the\n first to sign the first, real India-based billion-plus deal,\n however, Nielsen would have been a safe bet. (British Telecom\n signed a $1 billion, five-year deal with Tech Mahindra last\n December that is bigger in annualized value than the\n Nielsen-TCS deal and narrower in scope. But BT is part owner of\n Tech Mahindra.) Headquartered in New York and Haarlem, The\n Netherlands, and operating in 100 countries, Nielsen is an\n offshore outsourcing veteran, including most notably a 1999\n deal between Nielsen Media Research and Teaneck, N.J.-based\n Cognizant Technology Solutions (CTS), an outsourcer with its\n major operations in Chennai, India. (Note: Both Cognizant and\n the AC Nielsen Corporation were part of Dun & Bradstreet\n before a 1996 spin-off.)And Mitchell Habib, Nielson\u2019s executive vice president\n of global business services, hired in March 2007 to oversee all\n operational and IT functions, has a history of offshoring, as\n well. (For more, see "Mitchell Habib Surfaces at Nielsen".)\n Before joining Nielsen, Habib served as CIO for two\n Citigroup business units and in CIO roles at several\n divisions of Indian outsourcing pioneer General Electric\n (GE).Although both company and IT leadership have offshore\n experience, the deal with TCS remains a gamble. Nielsen\n \u201cgets more value from TCS because the deal is larger and\n TCS can innovate more to streamline the current\n workflow,\u201d says Davison, adding that there\u2019s a\n caveat: \u201cWith a single provider, Neilson takes a risk\n that could compromise its business if TCS doesn\u2019t\n deliver.\u201dFor its part, TCS said it has built in contract language to\n minimize such risks. \u201cTCS has certain goals it is\n responsible for meeting throughout the terms of the contract\n and Nielsen has guaranteed a level of revenue to TCS as we meet\n each one of these goals,\u201d a spokeswoman said in an\n e-mailed response to questions.