In Worlds largest tech company, IBM has renegotiated its outsourcing contract with Vodafone Essar, according to the report published in The Economic Times. The two companies have now signed an extended deal under which IBM will receive around $1 billion for managing the IT systems of Vodafone till 2017.
Vodafone had entered into an over $400-million, five-year outsourcing contract with IBM in 2007. That contract will expire next year. Both the companies have now agreed to restructure the contract to close to a billion dollars.
During the past 19 years, IBM has been slowly and quietly moving to control India's lucrative domestic IT business in the backyard of the country's top technology companies, like Wipro, Infosys, TCS and others, which have been concentrating mostly on the overseas customers.
The main challenge for IBM, however, is to increase profitability of these engagements, especially the ones signed with phone companies, which are squeezing costs to cope with falling ARPUs (Average revenue per user).
Along with Vodafone, IBM is also deeply involved with Indias largest telecom company Bharti Airtel. IBM also garners substantial revenues from government owned entities like the Indian Railways, which had recently sought IBMs help in developing a crew management system last year.
With an employee strength of 120,000, around one-fourth of IBMs global workforce is now based in India. In terms of revenues, IBM is now one of the top five technology companies in the country, behind TCS, Infosys, Wipro, Cognizant and HCL.
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