RCOM Outsourcing IT To Focus on GSM

by CXOtoday Staff    Apr 11, 2007

Following the footsteps of its competitors in the telecom segment, Reliance Communications has decided to outsource its IT to a specialized service provider.

According to sources, the move will enable RCOM focus its energy on GSM.

Confirming the development, a RCOM source said that the decision was taken Monday. The deal, valued between $1.3b and $1.5b, would be for a period of ten years.

It includes outsourcing entire IT department including ERP (deployed by SAP), billing and payment, CRM, credit collection, revenue assurance, subscriber management among others.

The source informed that the deal would enable RCOM focus on core business activities, telecom services and growth. “The company has reported a Capex of $1.7 billion in the year ending March 31, 2007. It has accelerated the Capex projection to $ 2.5 b for next year. We are readying ourselves for the roll- out. IT is a specialized field, and we feel that an external service provider should now handle the department.”

Though the concept is in infancy, the source disclosed that employees in the IT department at RCOM would work in tandem with the SP. Alternately, they may be imbibed with the SP team. He however, maintained that it was too early to make further comment, lest it raise speculation.

RCOM is currently evaluating vendors and a decision would be taken soon. The source refused to commit the period the deal would be closed. However, the Economic Times reported that the company expects to receive a final proposal from SPs in the next two to three weeks and the contract could be signed in the next six weeks.

It added 1.2 million subscribers covers over 10,300 cities and towns across India.

The company, traditionally a strong player in the CDMA segment wants to focus now on the GSM market. It is also ready to 3G, WiMax, convergence and other technologies, and is waiting for the government to free the spectrum. It has already informed the department of telecommunications that it wants to provide GSM spectrum in all the areas in which it is operating.

The company’s business encompasses a complete range of telecom services covering mobile and fixed line telephony, which includes broadband, national and international long distance services and data services as also value-added services and applications.
Some of these include Mobile World, Netconnect, Wireless PoS for credit card transaction processing, wiresless ATMs, mobile virtual private network, vehicle tracking system, integrated enterprise solution, besides, e-health, e-education and digital workplace.

It is also an Internet Data Center (IDC) service provider, hosting business critical applications of Indian and foreign blue chip companies, financial institutions and organizations. The data centers are housed with more than 200,000 sq ft of hosting space. Two IDCs - of 35,000 sq ft (IDC1) and 100,000 sq ft (IDC2) - are functioning in Mumbai and another two - of 20,000 sq ft (IDC1) and 50,000 sq ft (IDC2) - are functioning at Bangalore.
The company is also setting up data centers in Chennai, Hyderabad, Delhi and Kolkata, making a total of more than 500,000 sq ft of hosting space available over the next year.

The IT team at RCOM (along with external technology partners) has played a vital role in putting up the infrastructure to support these activities. The source said that the specialized SP should be able to retain these activities flawlessly, as also add value of their expertise into these projects.

He said, “The outsourcing would enable operational efficiency, benefit of cost and would enable use to incorporate it in our overall projections.”

It may be recalled IBM had signed a similar deal with Bharati Airtel in 2005. Bharti’s rationale for the deal with IBM was to enhance shareholder value by ensuring a “predictable IT spend, improved cash flow and optimized use of technology resources. The deal included data center management, end user support, help desk activities, network management, asset tracking (hardware infrastructure reviews), maintaining legacy applications and packages and IT consultancy and business continuity services.