MUMBAI: The ministry of external affairs is planning to hike passport fees by at least Rs 199, according to a ministry official. This follows the ministry inking a 6-year outsourcing deal with Tata Consultancy Services that is worth around Rs 1,000 crore.

Last year, the government issued 50 lakh new passports. By 2011, the ministry is targeting issuance of 1 crore passports a year.

The hike will be to pay “services fee” to TCS for its services, so a back of the envelope calculus shows TCS should earn around Rs 100 crore annually from the deal.

“Studies have shown that citizens were willing to pay additional money, provided you get a better service. In our view citizens would be happy to pay additional money.

There would be some kind of a revision of fee … you will get to know about it through a notification,” ministry official told DNA Money.

Currently, applicants need to shell out Rs 1,000 for a fresh passport with 10-year validity.

“We will have a national rollout in 18 months. The total services revenue is expected to be Rs 900-1,000 crore for the life of the project, or about Rs 199 per passport,” Tanmoy Chakrabarty, head of global government industry at TCS, said.

The government will pay for core assets like application software etc which they will own, all other expenditures that is involved in the project like employee cost and running passport Seva Kendra’s etc would be incurred by TCS and they would recover it by services fee.

“At the end of every quarter, based on performance of 28 service metrics like citizens convenience etc we will make the payment (to TCS). So government would charge one fee, certain portion of it would be given to TCS,” the government official added.

Under the Rs 1,000 crore six-year deal, the ministry expects the issuance of new passport to be completed within three days with passport on Tatkal scheme to be dispatched on the same day. The pilot project would kick off from Chandigarh and Bangalore by March 2009, and subsequently government would open 77 passport filling centers pan-India.

Initially, 150 TCS employees would work on the project and that would be scaled to 1,500 employees by the countrywide launch.

The government vertical, under which the passport project comes, contributed about 5% to TCS’ first quarter revenue of Rs 6,411 crore. The IT firm expects the vertical to contribute in “double digits percentage points” in the next two years.

Meanwhile, TCS did not provide any forward-looking statements as it is in the silent period currently with its quarterly results due on October 22nd.

When asked about the current market situation and the impact on TCS, its chief executive and managing director S Ramadorai said, “We need to wait and watch in the current scenario”.

“Long term strategic objective of technology as a enabler would be very much there. We have been focusing on India for more than 40 years and our focus will remain. So there is no specific thing because of this and because of that,” Ramadorai told DNA Money.

Recently, TCS acquired Citigroup Global Services, the India-based captive business processing outsourcing arm of Citigroup for $505 million. The deal also included $2.5 billion of assured revenue over a period of 9.5 years by Citigroup to TCS.

“We hope to complete that (Citigroup Global Services) transaction by end of the year,” Ramadorai added.

source: Dnaindia

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