IBM wins contract to transform Indian mobile operator

IBM Corp. has bagged a 10-year business transformation contract from a large Indian mobile services operator, Idea Cellular Ltd. The contract, awarded on a risk-reward revenue sharing model, is expected to bring to IBM revenue of between US$600 million and $800 million over 10 years, Idea said Wednesday.

The contract, which includes an IT outsourcing deal, will involve migrating Idea’s current legacy IT infrastructure to a layered architecture, said Prakash Paranjape, chief information officer (CIO) of Idea, based in Pune, India.

The contract also includes automation and integration of Idea’s business processes, such as its billing system, customer relationship management, and business intelligence, Paranjape said.

IBM will also manage and support Idea’s IT Infrastructure. Employees of Idea’s IT department will continue to work as Idea or IBM employees.

The risk-reward scheme, which is based on Idea’s projected revenue generation and predefined service levels, recognizes that IT can play a key role in revenue generation in the company, Paranjape said.

Idea currently has a subscriber base of over 14 million.

A large number of Indian companies are outsourcing their IT functions. IBM bagged an IT outsourcing contract in 2004 from another mobile operator, Bharti Airtel Ltd., that was valued at US$750 million over 10 years. The scope of the engagement with Bharti has since been expanded to include new areas such as customer services and business process outsourcing, said a spokeswoman for IBM.

Most of the outsourced business from Indian companies has however gone to multinational services companies rather than Indian outsourcers, because Indian outsourcers are focused on more lucrative contracts abroad, according to research firm Gartner Inc.

In both the Bharti Airtel and Idea deals, IBM has adopted a risk-reward sharing model, though in smaller deals it adopts pricing models more suited to the customer, the spokeswoman added.

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