IBM India and Bharti Airtel have finally announced their renewed partnership. The deal had come under a lot of limelight thanks to its sheer size and much was said about IBM losing the race for one of the biggest IT deals ever. The deal, touted to be a new agreement, builds on the 10 year relationship between the two organizations. However, the refreshed deal is said to be covering transformational technologies like customer facing analytics and big data in its ambit. Led by the new Airtel Bharti CIO, Harmeen Mehta, the deal involves IBM India managing Airtel’s infrastructure and application services (including analytics) in India over the next five years.
Although IBM has refused to comment on the deal size, Greyhound Research estimates the deal has been inked in the range of US$750 – US$850 million for a period of five years. Greyhound Research also predicts the deal to touch US$1 billion over the next five years with incremental focus on analytics and big data, writes Sanchit Vir Gogia, Founder and CEO, Greyhound Research on his blog (asdisruptiveasitgets.com).
Gogia also mentions on his blog that Bharti Airtel of2014 is not the same organization as 2004. “At the time when this deal was inked in 2004, Bharti Airtel was in a hyper growth mode and needed extensive support from an external IT vendor to support the rapid growth and also build internal capabilities to support the IT setup.” Bharti’s business in has grown 10x over the past decade India (remember, this renewal only impacts the IBM Bharti deal in India and not other international markets) – between 2004 and 2014, the subscriber base has grown from 4 million to 200 million. The company is now in a relatively mature stage where it needs to effectively run what it has built as part of its IT setup over the past decade and only add incrementally.
Gogia believes that the speculation of Airtel signing on multiple vendors for this deal is an indication Bharti is de-risking itself. It has been speculated that Bharti Airtel has decided to split the deal between multiple vendors, including Indian major Wipro. “Greyhound Research believes such decisions point to the end-user organization de-risking its sourcing model. As most have missed and overlooked, this is not the first time Bharti has exercised this option – in 2010, Bharti had split the US$ 500 million deal in Africa between three IT vendors. Many other such examples exist where IT decision makers are not only moving away from using a single vendor for all of its IT operations, but are choosing a variety of delivery and sourcing models like Cloud and managed services to service its operations,” says Gogia.
The deal, according to Gogia also emphasizes on the gradual replacement of strategic outsourcing by cloud and managed services to leverage the cost and delivery benefits that come with these newer models. “This deal is a classic example where the end-user organization – Bharti Airtel in this case – is leveraging these newer delivery models to better manage money and time spent on servicing its existing infrastructure and application portfolio.”
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