IBM Outsourcing Deal With India's Bharti Triples To $2.5B - InformationWeek

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IT Leadership // CIO Insights & Innovation
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4/6/2009
07:11 PM
Bob Evans
Bob Evans
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IBM Outsourcing Deal With India's Bharti Triples To $2.5B

The explosive growth of Indian telecom client Bharti Airtel is driving a similar explosion in the value of the $750M, 10-year outsourcing contract Bharti signed with IBM in 2004. With Bharti adding 3 million customers a month, the size and scope of its IBM partnership has expanded dramatically and could push the 10-year value of the deal to $2.5B.

The explosive growth of Indian telecom client Bharti Airtel is driving a similar explosion in the value of the $750M, 10-year outsourcing contract Bharti signed with IBM in 2004. With Bharti adding 3 million customers a month, the size and scope of its IBM partnership has expanded dramatically and could push the 10-year value of the deal to $2.5B.In addition to a huge bump in revenue, the expanded deal with Bharti is also providing IBM with a template for outsourcing deals with other telecom companies around the world that could ultimately generate $4B in revenue for IBM, according to the Economic Times of India, which said IBM has locked up or is in negotiations for the following outsourcing deals with telecom clients:

  • Vodafone for $1.2B; signed last year
  • Idea Cellular for $900M; signed last year
  • Maxis (Malaysia) for $300M; signed in February
  • MTN, Africa's largest telco, for $2B; reportedly in negotiations
  • Meanwhile, Bharti continues to leverage IBM's strengths in business-process outsourcing to handle new and different types of business, including increasingly deep connections with some of Bharti's top customers, according to the Economic Times article:

    Bharti, which recently launched mobile services in Sri Lanka, has outsourced all its IT requirements in the island nation to IBM. It also handles the IT operations for Jersey Airtel, a subsidiary of Bharti which offers mobile services in Channel islands in Europe.

    Last year, IBM's BPO arm in India bagged a six-year contract to provide voice and back-office services including customer service, collections, and customer retention for Bharti's premium customers. After that Bharti and IBM also signed a $150-million deal under which the software major would handle all IT operations for the telco's direct-to-home (DTH) television and Internet protocol TV (IPTV) services.

    The IBM-Bharti deal is intriguing not only for its size and increasing depth of engagement but also because it represents yet another case of how IBM has been able to achieve huge success in winning outsourcing contracts within India, which leads the world in offering such services.

    About six weeks ago, we blogged here at Global CIO about how IBM, for the second year in a row, held the largest market share within India for IT services as "Indian CIOs are requiring outsourcing partners to offer end-to-end services and deep domain expertise and are putting less emphasis on low prices."

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