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Best Buy expands software ties with TCS

Leading US consumer electronics retailer Best Buy Inc said on Tuesday it was 'significantly' expanding its software services partnership with India's largest software firm Tata Consultancy Services.

Best Buy's business office director, Tim Bates, told a news conference the expanded ties with unlisted TCS, along with a recent alliance with India's leading listed software firm Wipro Ltd, were part of plans to shift more software development work to India.

"TCS has been partnering in maintaining our core application systems since 1999, and we took a decision about four months ago to rapidly expand into software development offshore in India," Bates said.

"This is going to grow very significantly next year."

The retailer, which runs over 1,800 stores in the United States and won regulatory approval last week for its acquisition of Canada's leading electronics retail chain Future Shop Ltd, spends more than $200 million a year on information technology.

Privately held TCS currently deploys more than 140 software professionals both in the United States and at its Indian offices to support Best Buy's software applications. And it is putting another 50 developers onto new projects from the retailer.

TCS, India's largest software exporter with revenue of Rs 31.42 billion in the year to March, earned $9.0 million in revenue from Best Buy in the year to March.

"This year it should be more than $10 million," TCS vice president S Padmanabhan said.

Bates said the challenge now was to get the Minneapolis-based company's 900 software professionals to partner with the Indian offshore developers from Wipro and TCS.

"The offshore model is new for Best Buy, so we are going to go relatively slow on this. But given our aim to be in the neighbourhood of $100 billion in the next 10 years, it is going to take a lot of doing in terms of technology support."

Best Buy, which currently spends about $105 to $110 an hour on information technology services, said last month while announcing the alliance with Wipro it expected to make significant savings through the partnership.

Indian software companies have touted the significant cost advantage they offer, charging an average $25 an hour for work performed in India for overseas clients.

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