TCS: details of $1.2 billion IT, BPO contract
By Bala Shah

In October last year,   Tata Consultancy Services (TCS) was rejoicing in the fact that it had just signed a 1.2 billion dollar 10-year outsourcing deal with Nielsen, an information and media company.  This was the biggest ever contract for TCS.  Like many outsourcing deals the techies in USA were dismayed, while techies in India were happy at more jobs and money.  It was certainly a big win for the tech industry in India. 

The agreement between the two giants was signed to be effective from Oct 1, 2007.  According to the agreement TCS would “successfully build and operate a high-performing integrated global (outsourced/offshore) IT and BPO delivery capability for Nielsen”.

A closer look at the Nielsen-TCS contract makes for interesting reading.  While such information is common knowledge among senior managers, it would certainly help juniors at the Team Leaders and techie levels understand how the system works. As you can see later in this article Nielsen could reject any techie after 4 weeks without paying a rupee for his services.  Nielsen can also ask TCS to remove any of its managers which the Indian company has to do within 15 days.  Nielsen would give a day off rather than overtime.

I have tried to cut out the legalese as much as possible so that all of us get a better understanding on how such deals are worked out.

What would happen at the end of the 10 years?  According to the contract: “If Nielsen desires to renew this Agreement, Nielsen shall provide written request of Nielsen’s intention to renew, such notice to be provided prior to the end of the eighth year of this Agreement. The Parties shall negotiate in good faith the terms and conditions applicable to such renewal period. If no agreement on a Renewal Term is reached between the Parties prior to end of the ninth Contract Year of this Agreement, Nielsen may request Termination – Expiration Assistance Services and TCS shall be obligated to provide such Services in accordance with Section 27 of this Agreement”

How often would TCS brief Nielsen?  According to the contract:  “At no additional charge to Nielsen, TCS shall meet with Nielsen at least semi-annually to brief Nielsen regarding technological developments and advances as well as new or enhanced services, Software, tools, products, processes or methodologies of possible interest or applicability to Nielsen. Such briefing shall include TCS’ assessment of the business impact, performance improvements and cost savings associated with each if adopted by Nielsen”
 
According to the contract: “Any new Hardware or Software acquired by TCS which are paid for by Nielsen or for the cost of which Nielsen may be required to reimburse TCS shall be subject to Nielsen’s prior approval”.

How much time is needed to outsource the services?  3 months for IT Services and 6 months for BPO Services. 

What are TCS obligations to provide office space?  “TCS shall provide to Nielsen without charge on an as needed basis, furnished office space at any TCS Service Location, including reasonable office supplies and access to photocopiers, fax machines, telephones, desktop computers and Internet access for the use of the Nielsen Project Manager or his designees when visiting such location. “

Nielsen ensured that the deal legally bound TCS not to perform any services in a Shared Resources model where hardware and/or software would be shared with other TCS clients.

The contract about TCS employees gives an insight on how these deals really work.  The main points were

-   TCS shall provide Nielsen with the number of TCS Resources dedicated full time to providing the Services at the end of every ninety (90) day period after the Agreement Effective Date.

- TCS shall use Commercially Reasonable Efforts to keep the Resource turnover rate at a minimum across the Nielsen account. TCS shall not voluntarily remove a Resource assigned to Nielsen account without obtaining prior written approval of Nielsen.  Nielsen acknowledges that rotation of a Resource between on-site and Off-Shore shall not count as removal of Resources.
 
- Nielsen may notify TCS if Nielsen determines that the continued assignment to the Nielsen account of any TCS Resource is not in the best interests of Nielsen. Upon receipt of such notice, TCS shall have a reasonable time period, not to exceed five (5) days, to investigate the matters stated therein, discuss its findings with Nielsen and attempt to resolve such matters to Nielsen’s satisfaction, including the permanent removal of such Resource upon continued Nielsen objection. To the maximum extent possible, the removal and replacement of any Resource under this Section shall be conducted so as not to interrupt or adversely affect the Services.

- If Nielsen is not satisfied with the Services provided by any individual Resource at any time during the first four (4) weeks of such Resource’s assignment, TCS shall replace such Resource and re-perform such Services at no charge to Nielsen (including charges for the original or re-performed Services, or any costs incurred in replacing such Resource).

- Whenever any resource providing Services to Nielsen is replaced or transitioned (other than in the case of where a Resource is transitioned from on-site to Off-Shore or vice versa within a particular SOW) by a Resource, TCS will provide, at no charge to Nielsen, up to a maximum of six (6) weeks of Services by the replacement Resource to account for the training/transition period expected to be taken by the replacement Resource to begin performing the Services at the expected level, irrespective of when the replacement Resource is placed into a Project (whether at the Project’s inception or after the Project has begun); provided that TCS may begin to charge Nielsen for days actually worked by such a replacement Resource prior to such period of six (6) weeks, if the Parties mutually agree that such Resource is able to perform his or her assignment to Nielsen’s satisfaction.
 
-  If TCS fails to meet the Critical Service Levels and Tier One Quality of Service Metrics and if Nielsen reasonably believes such failure is attributable in whole or in part to TCS’ reassignment, movement, or other changes in the Resources allocated to Nielsen to the performance and delivery of the Services and/or to TCS Approved Subcontractors assigned to the Nielsen service team, Nielsen will notify TCS of such belief. Upon receipt of such notice from Nielsen, TCS will promptly provide a report and meet with Nielsen to work out a solution

- The Parties will identify up to thirty percent (30%) of TCS Resources performing Services on each Project as “Key Resources.” Key Resources shall be not be replaced or re-assigned without Nielsen’s consent for 24 months after their assignment to Nielsen account. All removal and replacement of Key Resources shall be based on a rolling six (6) month Key Resources replacement plan, the status of which shall be reported to Nielsen Project Manager at the end of each month. At TCS’ request, the Project Manager for each SOW will cooperate with TCS to determine each Key Resource’s stated exit date from that specific Project.

- As applicable, Nielsen will designate certain Resources in SOWs as Domain Experts. The aggregate number of Resources designated as Domain Experts may not exceed ten percent (10%) of the Total TCS Target Headcount provided for in Schedule F. Domain Experts shall be subject to the restrictions provided in Section 9.1.
 
 -  Nielsen shall have the right to request replacement of any TCS Manager specified in Section 10.6 at any time and TCS shall make such replacement within fifteen (15) days of such request. Replacement of Key Resources shall be as provided in Section 10.2(a).

-  Nielsen acknowledges and agrees that Nielsen employees are, and will remain, the employees of Nielsen and under no circumstances shall TCS be considered the employer of such persons.
 
-  In order to provide incentive for TCS Personnel assigned to Nielsen account to dedicate their efforts to serve Nielsen, TCS shall develop and administer (consistent with its general personnel policies) a compensation structure for TCS Personnel that includes a significant portion of their compensation being determined based on Nielsen’s satisfaction with the Services, including meeting Critical Service Levels and Tier One Quality of Service Metrics.

 - Whenever TCS Key Personnel have knowledge of any actual Labor Dispute involving the employees of TCS, TCS Agents, or others that may materially affect the provision of Services, TCS shall promptly so inform Nielsen and the Parties shall cooperate to minimize the effect of such dispute on the provision of Services, whether or not such Labor Dispute occurs at an TCS Service Location, Nielsen Service Location or Other Service Location.

Techgoss note:  You can read the full contract at this Govt website