Now, TCS eyes defence services biz

Big-ticket Indian IT companies, including Tata Consultancy Services and Hewlett-Packard, are preparing to tap the huge potential that the defence services present for sale of communication networks.

Sales of communication networks have doubled to Rs 700 crore (Rs 7 billion) in the last 12-odd months.

According to estimated sales of defence equipment to defence equipment, over the next two years, is expected to equal the cumulative business generated in the last 10 years, said HP country manager (defence & sales) AK Talapatra.

While Tata Infotech recently signed a $5 million deal with the Indian army for inventory management, TCS signed a deal with the Indian Air Force to provide logistics for their entire communications network and CMC Ltd signed a $10 million deal with the Northern Air Command.

"Apart from the deal with the Indian Air force to provide logistics for their entire network, the company is also providing software to set up the army data centre," said Tanmoy Chakrabarthy, vice-president & head, Global Government Industry Group, TCS Ltd.

Both the deals have been signed by the company within the last one month, added Chakrabarthy. HP, which recently signed a $3.5 million deal with the Indian Air force, has sold hardware worth $15 billion in the last six months to all the defense services, added Talapatra.

While majority of the work continues to be done by Bharat Electricals Limited the increased focus on public sector-private sector partnership in the defence segment is mainly due to BEL's inability to handle the mammoth scale of operations.

"The recognition of BEL's limitations in scaling up has been the reason for this sudden growth in the defense vertical by the IT companies," said Chakrabarthy.

Companies feel that the trend will continue in the long-run and the market will, in fact explode in the next two years with the setting up of defence communication network (DCN) and tactical communication network (TCN).

"In two years, the Army, Navy and Air Force will set up the DCN and TCN which will exponentially increase the expenditure on IT and would run into thousands of crores (billions)," added Chakrabarthy.