AstraZeneca to set up IT captive unit in Chennai

Indian IT firms to get less outsourcing work

Updated - May 18, 2016 07:58 am IST

Published - February 13, 2014 10:51 pm IST - CHENNAI:

David Smoley

David Smoley

AstraZeneca plans to substantially reduce the amount of outsourcing work it gives to Indian software services exporters, as it looks to cut down its IT budget and improve operational efficiency.

As part of this move, the British-Swedish pharma major will also set up an IT captive unit in Chennai, which will employ 1,000 people over the next few years.

The chief information officer of AstraZeneca, David Smoley, is in India this week to meet with the company’s IT partners and vendors. “Today, roughly 70 per cent of our IT work is outsourced. Our goal would be to target around 30 per cent, which is still healthy. We want to become a world-class IT shop, with both classic IT ops and a big emphasis on innovation,” Mr. Smoley told this correspondent.

“We want to gain control from an IT operations perspective. As we bring work in, we’ll gain some efficiency…we’ll gain better control.” he added.

The global technology centre here, which will be operational by mid-2014, will be the first and largest of three centres. The other two centres will come up in California and Eastern Europe. Some of the work that will be done will include SAP, infrastructure operations (network monitoring), application development and maintenance, and cloud and mobile. For AstraZeneca, according to Mr. Smoley, HCL Technologies mainly handles infrastructure while application development and maintenance is spread between Cognizant, Infosys and Accenture.

The company’s global IT budget is roughly $1.3 billion—which will be roughly halved in the coming years.

“I do think that there is, in general, a dissatisfaction and a recognition for many companies that outsourcing can go too far. And if not managed properly, it can be expensive. There are efficiencies you can gain from creating a strong central team,” he said.

Part of what we’re doing, Mr. Smoley said, is “taking back technical leadership and technical control.”

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