Tesco rings up Xansa deal

Tesco has signed a contract with IT company Xansa to provide on and offshore services for the retail giant.

Xansa said the contract includes a "minimum revenue commitment" over the three years to 2008. The value of the deal was not revealed.

The services company said the deal builds on a relationship that extends back over 15 years.

"Xansa will continue to drive down the cost of Tesco's core IT operations through delivery excellence, use of offshore and improvements in productivity," the company said in a statement.

IT will deliver services through its UK and Indian operations, including application management, software development and programme and project management for Tesco IT systems covering distribution, stock replenishment, products and pricing.

It will also support Tesco's UK and Republic of Ireland payroll systems as well as providing general sales information.

Alistair Cox, Xansa CEO, said: "We are extremely proud to be working for Tesco, a world class retailer. Our relationship goes back over 15 years and has been built upon consistent excellent delivery and providing innovative solutions to Tesco's challenges. I am very pleased that this has been recognised in this IT services agreement."

In a research note Ovum Holway analyst Samad Masood said that Xansa "may well breathe a sigh of relief" that Tesco has decided to stick with it, especially as the retail giant opened its own offshore centre in Bangalore in January.

"By winning this deal, Xansa continues to prove its offshore credentials in the face of Tesco's other offshore suppliers - Wipro and Infosys," Masood said.