Contenders like Tech Mahindra, TCS crowd services market.
By R. Chandrasekaran
CHENNAI: The US–based International Business Machine’s (IBM) outsourcing contract with India– based telecom company Bharti Airtel is coming to an end next year.
While it is premature to come to any conclusion now, the fact is that IBM seems to have started negotiations for renewing the contract. However, it will be tough for them to win the renewal in full given the fact that domestic companies are not ready to leave any stone unturned in their quest to expand business horizons.
In 2004, IBM struck a deal with Airtel for providing telecom networks and desktops apart from offering software applications. The deal was valued around $225 – $250 million a year for a 10-year period. They had won the deal relegating the leaders, Tata Consultancy Services and Infosys. This is one of the biggest contract and largest in India for IBM. Therefore, it is quite understandable that the American company wants to renew the contract, especially after it lost its BP contract last year to its competitor Accenture.
Sensing that renewal of Airtel contract may face roadblocks; IBM’s chairman, president and CEO Virginia M (Ginni) Rometty reportedly descended to India last month and held a meeting with Bharti Airtel’s chairman Sunil Mittal. Live Mint reported that Rometty’s meeting was a last ditch effort to save the contract.
The IT scenario has changed a lot during the last nine years since the signing of the contract in 2004. If reports are to be believed, the Indian telecom company will not likely ignore IBM totally, but it will also be unlikely that the company will renew the contract fully on a platter. It appears that Tech Mahindra, which has been termed as more aggressive, is likely to give tough competition to others, be it IBM or TCS or any other IT company.
Reports indicate that the relationship between the two companies were not all that enthusiastic given the fact that Bharti Airtel has replaced its official email application to Microsoft Exchange from IBM’s Lotus Notes, thus suggesting a thorn in their relationship.
Analysts and experts seem to believe that IBM will have to settle down with whatever contract they get and Airtel will most likely to opt for a break in services, using different vendors.
To contact the author, email to rchandrasekaran@americanbazaaronline.com