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Globalization update: Indian IT firm reshapes Tucson's tax system

Indian firms haven't been visible in the local and state government market, but globalization is changing that

September 12, 2008 12:00 PM ET

Computerworld - Indian IT firm Tata Consultancy Services Ltd. is upgrading systems for state and local governments, competing in a market where the words "India" and "outsourcing" make politicians bristle.

And Tata is being very bold about it. It's calling its tax and revenue systems, Tax Mantra, a word rooted in India. It has completed seven tax system projects for cities in the U.S. At least two of those are in the Arizona cities Phoenix and Tucson. The full list isn't being disclosed.

Tata, as a provider of tax and revenue systems may be a relatively new vendor in the local government market, but it has worked for years modernizing tax systems in India. The company said tax systems share many similarities globally. Tata is one of the largest IT services and outsourcing providers in the world, with more than 116,000 employees.

Tata just completed a modernization project for Tucson. The city's outdated system was a 20-year-old IBM mainframe system that ran mostly homegrown applications written in Cobol, according to Gage Andrews, deputy director of the city's IT department. The city received a number of proposals from vendors. What helped Tata in its bid was the work it did elsewhere in Arizona. Because of that work, it knew the state and local customization requirements, Andrews said.

The city followed Tata's recommendation as far as platform, moving to Window servers and browser-based applications with capabilities for taxpayers to manage their taxes online, a feature the city wasn't able to offer previously. The data from the mainframe applications was migrated to new applications in a J2EE environment.

"What was impressive to us was Tata's ability to take an application that was not Web-based and turn it over to a Web-based application," Andrews said.

This is a turnkey project, with Tucson's IT staff running the day-to-day operations and equipment. The city isn't outsourcing operations, although Tata provides ongoing maintenance and support. Once the city is completely off the mainframe, Andrews said the IT staff that worked on it will be redeployed to other projects.

Asked about using an India-based company, Andrews said that "with the globalization of IT, it's going to be pretty hard to find somebody that is only an American-based company."

Chris Dixon, an analyst at government IT market research firm Input in Reston, Va., agrees with Andrews' perspective, and said state and local governments may hire U.S.-based IT firms for similar projects that nonetheless ship work overseas to stay competitive. But few Indian companies are winning work under their "own banners" as Tata has.

Local governments are already working with vendors in other countries, Dixon said. He cited Montreal-based CGI Group, which in 2004 bought Fairfax, Va.-based American Management Systems, a company that had done extensive state and local government work. Tata could acquire U.S. companies as well.

"If a Canadian firm can come into America and compete, there is no reason why an Indian firm can't do the same thing," Dixon said.

Tanmoy Chakrabarty, vice president and head of Tata Consultancy Services government industry solutions, said the company is working to sell its tax and revenue system approach globally.

The challenges involved in India, where many people don't own computers, required approaches such as the use of kiosks. Those weren't needed in Tucson because most people have access to a PC. But the use of the Tax Mantra framework in other countries won't be that difficult.

"The fundamental applications and principles of taxation have an underlying commonality of approach," said Chakrabarty, adding that he believes the system can be easily repeated, hence the word mantra in its name.

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