IBM May Have To Share Vodafone Contract In India

Vodafone India, which is in the process of negotiating the extension of its $1-billion outsourcing contract with IBM that expires in March 2016, is currently exploring options that include handing out a bigger chunk of business to other technology vendors and reduce its reliance on IBM which has dominated the domestic telecom outsourcing market over the past decade, according to three people familiar with the discussions.

The contract discussions will enter the final round of negotiations over the coming weeks and at the moment IBM is battling hard against domestic and multinational rivals to save a lion’s share of one of its largest telecom outsourcing contracts in Asia, the people mentioned above said. All of them requested anonymity as these discussions are confidential.

The deal talks between Vodafone, IBM and other vendors come barely two years after the renewal of the landmark Bharti Airtel outsourcing contract, which saw the scope and share of IBM’s revenues from the deal being reduced after the deal was renewed.

IBM currently gets about $100 million of annual business from the contract, the people mentioned above said. “The Vodafone deal is not exactly the same as the Bharti-IBM deal — in the original Bharti deal, IBM had a monopoly status and was the only vendor in the picture.

Whereas in the current Vodafone deal, we have been reducing our dependence on IBM over the past couple of years — other vendors such as TCS and Tech Mahindra have also been given small parts of the contract,” said one of the people mentioned above, who is a Vodafone source.

ET had reported in September that Vodafone had started talks to renew the contract. Later during 2015, Vodafone invited requests for proposals (RFPs) from other technology vendors — a clear sign that Vodafone was trying to reduce its reliance on IBM, the people mentioned above said.