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Vodafone India in Talks with IBM on Renewal of Outsourcing Contract worth $1 bn

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Vodafone India, one of India’s top telecom operators, has started considering the renewal of their outsourcing contract in India with their existing ally IBM. The contract is worth $1 billion and is set to expire in June 2016. The telecom operator outsources services like management of application development and the network services in the IT sector.

The telecom company also has other key players like Wipro, Tata Consultancy Services, Tech Mahindra and Infosys in consideration. "It hasn't given out the request for proposals to these vendors as of now,” said one of the sources familiar with this matter to Economic Times. "Bharti Airtel is leveraging these newer delivery models to better manage cost and time spent on servicing existing infrastructure and applications. Telcos globally are exploring, so should Vodafone," said Sanchit Vir Gogia, chief analyst & CEO at Greyhound Research.

Vodafone India has refused to comment on this issue, while the IT vendors did not retort to the emailed inquiries. Vodafone is currently in the process of appointing a new Chief Information officer after Anthony Thomas quit the company to join GE India as CIO.  As per sources, Vodafone is likely to renew the contract with IBM as it is not in a position to chop-up the agreement, unlike its rival Bharti AirteL.

For IBM, the Airtel deal was a landmark in terms of size and also the first outsourcing contract from India’s telecom sector. IBM, while trying to retain the deal is also making efforts to sell additional services like Data Analytics Solutions to Vodafone. Apart from Vodafone, the IT major will try renewing an outsourcing deal with Idea Cellular which comes up for renewal in 2019-20, worth $800-900 million. 

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