TCS only bidder for Billion dollar project
By Ria Sharma

TCS is the biggest Indian tech company and had revenues of $6 billion last year.  According to TCS, it has a client satisfaction rating of 89% for meeting quality expectations and an average budget variation on projects of just 3%.  It has more than 130 thousand employees supporting clients in every continent.

On March 3, 2010, TCS sent a press release to the media which read

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UK-based Personal Accounts Delivery Authority (PADA) is pleased to confirm that Tata Consultancy Services (TCS) has been named as the successful bidder for NEST scheme administration services. PADA intends to sign a contract with TCS later this month. The contract is divided into two stages and runs for 10 years, with possible extensions for up to a further five years. The first stage will run to October 2010, allowing TCS to begin the activity required to set up and administer NEST. Prior to the expiry of the first stage, a decision will be made on whether to proceed with the contract for the remainder of the contract term.
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N. Chandrasekaran, Chief Executive Officer and Managing Director, Tata Consultancy Services was quoted in the press release as saying: "TCS is delighted to be confirmed as the preferred bidder to deliver the NEST scheme administration solution and services. This project will make a difference to millions of people in the UK and we are fully committed to it. Our selection as the preferred bidder demonstrates our strong domain and solution expertise and highlights our commitment to the UK public sector.”

Unlike its other outsourcing wins, TCS did not release financial details of the deal.  It directed all media queries to the British Government’s National Employment Savings Trust (NEST). 

Some TCS insiders leaked the news to Business Line that the contract was worth £600mn.  A number of Indian newspapers published the figure which is worth about a billion dollars.

Meanwhile in United Kingdom,  talk around the water cooler was the British Government had negotiated so hard that every other bidder dropped out when they saw the terms and conditions.  Only TCS was prepared to bid so low, and so became the last bidder standing as other tech majors walked away.

British journalist Mark Kobayashi Hillary followed up the story.  While TCS refused comment, he spoke to PADA about their side of the story.  They confirmed that TCS was the single remaining bidder

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MKH: Many in the industry have said that every possible supplier dropped out of the tender leaving TCS as the only bidder.

TJ: Competitive dialogue is an expensive process – it’s only right that we should give feedback to bidders throughout the process so they can take appropriate decisions, and to enable us to run an efficient process.

In a complex procurement such as this it is not unusual for bidders to re-assess their position as competitive dialogue continues. TCS final bid has been formally evaluated against PADA’s evaluation criteria. 

As with any competition where a strong single remaining bidder emerges, there may be concerns about whether the final bid still offers value for money.  TCS’s final offer showed little variance with their bid from the early stages of the competition, so we can be sure that the contract does provide value for money.
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Such a prestigious multi million dollar contract would have the best outsourcing executives at Infosys, Wipro, IBM India and Accenture doing the numbers on what is practical and what may result in a financial loss.  If all of them walked away leaving only TCS, it shows how slim the profit margins are going to be. Then again, TCS may have the last laugh.