BackIBM wins Vodafone contract, its fourth telecom deal in India
IBM wins Vodafone contract, its fourth telecom deal in India
PremiumInnovative structure: IBM Corp.’s corporate headquarters in Armonk, New York. The order from Vodafone Essar points to the company’s growing success in winning technology service contracts in India.
Bangalore: The world’s biggest tech services company, International Business Machines Corp. (IBM) has signed a contract estimated at around $600 million (Rs2,364 crore) to manage the information technology function at Vodafone Essar Ltd, India’s third largest mobile phone services provider.
The contract, which will see the transfer of some 300 of the telecom company’s full-time IT staff to a local unit of IBM, is expected to support the roll-out of Vodafone Essar’s wireless network and fast-expanding customer base, which stood at 38.5 million at the end of last month.
“Under the deal, IBM India will assume responsibility for the management of all of Vodafone Essar’s IT operations with the exception of network service platforms, spanning both hardware and software," Vodafone Essar said in a statement.
“The agreement will encompass the management of IT services including the development and maintenance of key applications such as billing, business intelligence and financial systems."
The agreement also covers internal IT services such as data centre operations and support such as an IT help desk, security and transition programmes. Vodafone Essar will continue to retain full strategic control of its IT requirements. The telecom firm declined to divulge payment terms of the deal. “The agreement has an innovative structure based on risk and reward. Under the terms of the agreement, IBM’s revenue from the deal will be linked to the commercial performance of Vodafone Essar," a spokesperson for the company said.
But one person close to the deal, who did not want to identified, said the contract is valued at $600 million.
An analyst independently put it higher. “Bharti Airtel’s deal (was set at) 2.25% of their adjusted gross revenue. Based on that, Vodafone’s deal size for five years would be around $650 million," he said, requesting anonymity, too.
Monday’s contract reflects IBM’s growing success in winning tech service contracts in India. In March, Idea Cellular outsourced some of its tech and support operations to IBM in a 10-year, $800 million deal. Bharti Airtel, extended a 10-year revenue-sharing deal to manage its core IT infrastructure, earlier this year to more than $1 billion.
IBM expects its revenues from India, which grew 39% last year, to top $1 billion in 2007, PTI reported from New York on Sunday. It plans to invest more than $6 billion over three years through 2009.
malovika.r@livemint.com
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