The world’s largest chip making company, Intel and India’s second biggest software firm, Infosys Technologies are believed to have signed a pilot outsourcing contract valued at $10 million at present, but with the potential to grow into a $100 million engagement for Infosys.

Infosys has reportedly been pursuing this account for over a year, while it is a small deal now — it surely can evolve into a much bigger engagement, says a report in the Economic Times.

Infosys recently also won a $10 million BPO deal from Microsoft. Large technology companies have been under tremendous pressure to reduce operational costs, and outsourcing of non-core activities can result up to 20-30 % savings.

Intel has been constantly trying to use outsourcing for cost reductions. The chip maker outsourced its entire desktop management function about a decade ago. The company had been under pressure to reduce operational costs by trimming payroll and other efficiency measures the paper said. Intel aims to save around $700 million in operational expenditure this year alone.

This deal is good news for Infosys since revenues from its top customer BT (British Telecom) have declined by around $100 million.