India beckons as Shell signs $1bn outsourcing deal

Shell has signed an outsourcing deal with IBM and Indian services firm Wipro that is reportedly worth $1bn. It's a move that will see chunks of the oil giant's IT projects and services offshored during the next few years.

A spokeswoman for Shell confirmed that the company had signed a master services agreement with IBM and Wipro in February, although she would not reveal how long the deal is for.

"It means Shell has the capacity to outsource some of its project and IT roles should it wish to do so and will look at the business case on a project-by-project basis," she told silicon.com

The move is part of Shell's plan to save $850m a year by cutting its 9,000-strong IT department by almost 3,000. The spokeswoman would only confirm that the target date for those job cuts is the end of 2006.

Despite the high-profile of offshore outsourcing, the market is still only a tiny proportion of global outsourcing, so the size of the deal represents a huge coup for the Indian IT services industry, where the three major players, Wipro, Infosys and TCS, each only recently hit the $1bn turnover mark.