Supermarket group Sainsbury's has awarded a software development and support contract to India-based software house Infosys, worth £28m.
The contract comes on top of an existing outsourcing relationship between the two companies whereby Infosys controls the maintenance and development of Sainsbury's distribution and warehousing system.
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Under the deal, the Bangalore supplier will provide maintenance and development for the supermarket's finance, HR and marketing systems as part of a five-year deal.
Infosys will open a European proximity development centre (PDC) in the UK to ensure that on-site support is available. About 30 Infosys staff will be based at the centre, another 30-40 staff will be based in India and further staff will be on Sainsbury's site.
Sainsbury's staff working on the systems will be redeployed on an internal supply chain marketing system.
Bob Hammersley, senior manager of IT Services at Sainsbury's, said: "We chose Infosys because it offered better service at a better price. It has a quality culture and we have had a happy experience of working with it. The fact that that the company is based in India is irrelevant."
Nevertheless, Hammersley said that there was an advantage to using India-based staff. "The time difference means that they can make use of overnight time to deliver," he said.
He expects to save "in the region of millions" by working with Infosys, but added, "It's not as cheap as people think, as they have to maintain a UK presence."
Sainsbury's uses PeopleSoft HR system and Oracle Financials running on IBM mainframes and Unix platforms.
Sainsbury has unveiled a new point of sales system that promises to significantly cut down staff training times. The supermarket plans to introduce ICL's Global Store tills to a series of local convenience stores. The tills may be rolled out into the group's supermarkets if successful.