Indian IT Cos Eye Bharti Airtel's $1.5Bn Deal

by CXOtoday News Desk    May 07, 2014

bhartiairtel

Indian IT services major such as TCS, Infosys, Tech Mahindra and Wipro are racing for the $1.5 billion Bharti Airtel’s IT deal, which is likely to close soon. The telecom major has announced that it will give away a good chunk of the deal to Indian IT services companies, unlike before when IBM was the exclusive partner for the deal.

What’s the deal?

Unlike before, the telecom giant has scaled down the value of its IT services contract, which was renewed with IBM last month for a period of 5-year. Bharti-Airtel has now has decided to divide its IT outsourcing deals into three parts, out of which one has been already grabbed by global IT giant IBM.

While IBM has been the exclusive partner for the Bharti Airtel since 2004, this year can be a turning point for the domestic IT majors as a result of the deal restructuring.

In April this year, Bharti Airtel and IBM announced a new agreement to manage Airtel’s infrastructure and application services in India over the next five years. 

Read: IBM-Bharti Airtel Deal: Who’s The Real Winner?

The restructuring has brought down IBM’s share in the $2-billion IT deal significantly with just $500 million worth of outsourcing contracts from Airtel, according to sources who reported TOI. Apart from the deal size, which has reduced, the tenure of the deal has also been brought down to five years, instead of ten years like the previous deal.

Who can get the deal?

There’s a lot of speculation about which IT companies will get the Big Deal. A new report from CNBC-TV18 suggests that Infosys and Tech Mahindra could emerge as winners for remaining parts of the deal.

“The second deal is worth $1 billion is for infrastructure management services. Four players, namely Wipro, HCL Technologies, TCS and Infosys are in the race for the deal, with sources giving Infosys the upper hand,” the report said adding that Tech Mahindra is also outpacing multiple vendors for the third part of the deal. The company has emerged as the frontrunner for the third part that is for managed services and application development services.

While Bharti Airtel did not comment on which players will win the deal, the company had indicated it might bring in more partners for its IT needs.

The telco with operations in 20 countries across Asia and Africa also mentioned in a statement last month that as part of the new vision that it is building in-house capabilities and a strong partner eco-system.

While most of the IT majors are eyeing the big deal, industry insiders are keen to know in the end who gets the major share of it. After all, all’s well that ends well!