Australian smartcard developer ERG has decided to outsource software development to India in a move that could be a blow to local industry.
ERG holds several high-profile contracts around the world, including Sydney's public transport smartcard project, and recently took a decision to outsource to India's Tata Consultancy Services (TCS), according to a source close to the company.
ERG management recently announced the outsourcing arrangement to staff, but told them not to fear for their job security, ZDNet Australia was told. ERG employs around 900 staff in 11 countries, with much of its software development done in Perth.
Indian technology companies like TCS have steadily been winning more and more outsourcing contracts in recent years, particularly in software development, as they tout their high standards and low cost.
ZDNet Australia understands TCS consultants have been working at ERG's Perth offices for the last six to nine months to introduce Capability Maturity Model Integration (CMMI) to the organisation. A form of software quality accreditation championed by Indian outsourcers, ERG must use CMMI to help maintain quality standards when work is transferred from Perth to India.
Outsourcing negotiations between the two companies had been conducted "in secret" for some time, according to the source, fuelling speculation from staff that ERG was up for sale. This came to a head when ERG CEO Dr Allan Sullivan e-mailed staff denying ERG was the subject of a possible takeover from TCS.
It is not yet known what project work will be outsourced to India.
Last year ERG signed contracts with transport operators in Lazio and the Philippines for smart card based ticketing systems worth AU$34 million and AU$26 million respectively. The company also has major projects in other parts of Europe, China and the US.
ERG and TCS did not respond to ZDNet Australia's requests for comment by press time.