Dixons moves on from Logica fiasco

High-street electrical retailer Dixons Group (DSG) International is to outsource IT infrastructure support and software development to Indian IT company HCL Technologies in a deal believed to be worth around £150m.

The five-year deal with HCL Technologies begins in February and will cover system development, application delivery, infrastructure support and maintenance for the DSG group, whose brands include Dixons, Currys, PC World and The Link.

HCL will provide support from its site in Noida, near New Delhi, which will link to an operations group in the UK.

Dixons CIO left the company last year after the board pulled out of a planned IT outsourcing deal with LogicaCMG at the eleventh hour because of concerns over cost and complexity.

Kevin O'Byrne, group finance director of DSG International, said in a statement: "This co-sourcing partnership will enhance our capabilities, drive innovation and improve our agility as we build our position as Europe's leading electrical retailer."

DSG has not yet said how many staff will transfer to HCL Technologies as part of the deal.

Eamonn Kennedy, research director at analyst Ovum, said HCL Technologies beat off stiff competition from two UK and international IT services companies to win the contract.

He said in a briefing note: "To all the remaining doubters out there: HCL has just whipped away your comfort blanket. This deal is proof that Indian-based outsourcers have what it takes to beat the established players."