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Shell taps IBM and Wipro in India

The oil giant, which has said it aims to cut up to 30 percent of its IT staff, signs deals with Big Blue and Wipro Technologies for services to be delivered from India.

In another case of offshore outsourcing, oil company Shell has signed pacts with IBM and Wipro Technologies for information technology services to be delivered from India.

The Royal Dutch/Shell Group of Companies made separate agreements with the two technology service providers in February, Shell representatives said Thursday.

But Shell spokeswoman Lisa Givert took issue with recent reports that the outsourcing would be worth $1 billion or more. Neither "master of services" agreement commits Shell to "any particular volume of work," Givert said.

Givert declined to comment on the value of the contracts. But taken together, they are likely to be significant. Shell aims to trim its worldwide IT staff of about 9,300 by 20 percent to 30 percent by the end of 2006. Some of that work will be shifted to India, according to the company. Shell has major IT operations in the United States, the United Kingdom and the Netherlands.

The outsourcing deals are part of a larger Shell effort to cut its IT budget by $850 million annually by 2008.

A representative from India-based Wipro Technologies did not immediately respond to a request for comment. An IBM representative declined to comment on the Shell deal. IBM has some 9,000 workers in India and is acquiring Daksh, a 6,000-person Indian company that offers transaction processing and telemarketing services.

Offshore outsourcing has become a heated topic as well as an issue in the U.S. presidential campaign.

Advocates say the practice helps poorer countries develop, enables U.S. companies to stay competitive and creates jobs in the United States. Critics of shipping high-wage jobs to low-wage countries warn that so-called "offshoring" threatens the United States' technological leadership, economic vitality and military security.

A recent nationwide poll conducted jointly by CNET and Harris Interactive found that more than 40 percent of U.S. technology executives surveyed would be willing to pay higher taxes to compensate for jobs they send offshore.