TCS To Raise Outsourcing Prices - InformationWeek
03:39 PM

TCS To Raise Outsourcing Prices

The company will hike prices on new contracts from 5% to 10%, and will push for an increase of 3% to 5% on existing contracts that are up for renewal, a spokesman said.

Tech outsourcer Tata Consultancy Services will increase the price of services by as much as 10% on new contracts, a company spokesman confirmed on Monday.

The company, which provides a range of IT services to U.S. businesses from low-cost operating centers in India, will hike prices on new contracts from 5% to 10%, and will push for an increase of 3% to 5% on existing contracts that are up for renewal, the spokesman said.

Rising salaries in India, combined with TCS's move into higher value services, are what's behind the increases. "We're undergoing a shift from traditional application work to consulting and business services that are of greater value to the customer," said the spokesman.

At the same time, tech wages in India are increasing at about 15% per year as more and more companies -- Indian and American -- compete for skilled labor on the subcontinent.

Offshore service providers typically charge customers between $20 to $25 per hour for programming services, considerably less than prevailing rates in the United States. To compete, Western tech services providers such as IBM and Accenture have been building out their own presences in India, driving up local salaries in the process.

A portion of those cost increases will be passed on to customers. "When there are fresh new contracts and competency is involved and the customer is willing to pay for the expertise, we will raise the rates," said TCS CEO S. Ramadorai, in a weekend interview with the Times of India.

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of the Cloud Report
As the use of public cloud becomes a given, IT leaders must navigate the transition and advocate for management tools or architectures that allow them to realize the benefits they seek. Download this report to explore the issues and how to best leverage the cloud moving forward.
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on for the week of November 6, 2016. We'll be talking with the editors and correspondents who brought you the top stories of the week to get the "story behind the story."
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll