Vodafone Idea Limited (VIL) is believed to have finalised a new $700-800 million (Rs4,900 crore-5,600 crore) five-year technology outsourcing contract with IBM, a deal that is expected to contribute a major part to the Rs8,400 crore annual opex savings that the telecom market leader has set out to achieve by FY21.
“This deal between Vodafone Idea and IBM is a true testimony of the current times. While one of the expected benefits is of course IT costs savings, the deal is also hinged largely on the VIL’s aim to deliver enhanced customer experience. In order to achieve this, VIL will aggressively structure the deal on OPEX metrics and keep CAPEX to bare minimum; focus will also be to capitalise on a multi-cloud setup to ensure they can both tap onto IT resources as per need and pay as they consume.
While this may mean that the payout in the short run is less to IBM, but in the long run as consumption increases, IBM will stand to gain. At the other end, VIL will also consume analytics and AI security capabilities from IBM to deliver the much spoken about enhanced customer experience. These new age capabilities from IBM will help VIL capitalise on the existing and new IoT assets.
Separately, given the stated focus by VIL to invest in Automation, AI and ML frameworks by IBM, this deal for the latter should comfortably exceed USD 1 bn in the course of its existence over the next 5 years.” Sanchit Vir Gogia, Chief Analyst & CEO at Greyhound Research, told ET.
Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Technology & Innovation Research & Advisory firm. To read more about him, click here.
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