BackWal-Mart to step up IT outsourcing, evaluating more India vendors
Wal-Mart says it continues to be interested in increasing its presence in India
Premium(AFP)
Mumbai: Wal-Mart Stores Inc., the world’s biggest retailer, plans to increase outsourcing of software development and back-office projects to India and is currently in the process of evaluating fresh contracts for vendors from the country, executives involved in the discussions said requesting anonymity.
On Thursday, Wal-Mart’s global chief information officer (CIO) said at the Nasscom summit that the retailer has ongoing engagements with top Indian technology firms including Tata Consultancy Services Ltd (TCS), Wipro Ltd and Infosys Ltd.
Speaking at a leadership summit organized by Nasscom lobby group, Wal-Mart CIO Karenann Terrell said the company also had strategic tie-ups in India with companies such as Cognizant, Accenture, IBM, UST Global and SofTech. Wal-Mart, which is facing competition from rivals such as Target Corp. in newer markets such as Canada, has been pushing for more technology solutions to serve young consumers shopping on their mobiles and iPads. In 2011, for instance, Wal-Mart acquired social media technology firm Kosmix for $300 million. By increasing outsourcing of information technology (IT) projects to India, the retailer aims to save operational costs and use that to fund new technology bets, one of the executives familiar with the discussions said, requesting anonymity because he was bound by a confidentiality clause.
In an interview in September last year, Wal-Mart’s chief technology officer for e-commerce Jeremy King said newer technology solutions have become the latest battlefield for retailers.
“To give you a couple of stats—50% of the orders are done online and then picked up at the store. So customers buy online and come to the store and pick up. We launched a product called pay with cash. It was really surprising, within the first couple of months it accounted for about 2% of our online transactions. What that showed was that not all consumers are comfortable with putting their information online. That opened up a category of consumers that were blocked from shopping online previously," King said.
“If you listen to our boss, Mike Duke, talk about his strategic priorities, e-commerce is always in the top three. And this was not the case three or five years ago. And when Wal-Mart puts their mind into something, it happens. You’ve seen that in the last 25 years, in the last 50 years," King had said. Experts tracking outsourcing customers said such firms will continue to look at offshoring for cutting costs.
“What all companies that look into outsourcing have in common is that they look for more efficiency not just with costs but also with the whole organizational efficiency which is behind that, and the companies that you mentioned (General Electric and Wal-Mart) are not any different," said Frank Ridder of researcher Gartner Inc. “You have to identify how much of your own IT is specifically outsourcable in a very standardized way and what requires more dedication and utilization. For example, General Motors realized they needed much more insurance."
Wal-Mart, which is to be the subject of an enquiry in India over payments related to lobbying in the US, has said it continues to be interested in increasing its presence in the South Asian country. India’s $70 billion software exports sector provides IT services to several top companies in the world including JPMorgan Chase and Co., Merck and Citigroup Inc.
“We remain excited about the opportunities in India, one of the world’s most vibrant economies, and we consider it important for great talent in IT. We would like to continue to strengthen our base in India and create more jobs and opportunities," a Wal-Mart spokesperson said in an email response.
Bharti Walmart Pvt. Ltd, a joint venture between the US retailer and India’s Bharti Enterprises Pvt. Ltd, is currently engaged in the wholesale business.
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