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Our Bureau

Mumbai, Dec. 10 Vodafone Essar has decided to outsource its IT operations to International Business Machines (IBM) India in a five-year deal designed to boost efficiency and enable faster roll out of network infrastructure and services.

IBM will develop and maintain key applications such as billing, business intelligence and financial systems for Vodafone.

Under the deal, IBM will assume the responsibility of managing both the hardware and software side of IT operations with the exception of network service platforms, a communication from Vodafone said.

Vodafone claims that the agreement has an innovative structure based on risk and reward. “As per the agreement, IBM’s revenue from the deal will be linked to the commercial performance of Vodafone Essar. This will ensure the agreement continues to deliver value to Vodafone,” a Vodafone Essar spokesperson told Business Line.

Around 300 full time employees of Vodafone are expected to be transferred to IBM India, the spokesperson added.

The deal builds on Vodafone’s existing outsourcing agreements with IBM in Spain, the Czech Republic, Australia, New Zealand, Portugal, Ireland, Greece, and Italy, the note added.

Analysts believe outsourcing of non-core processes is a pressing industry need owing to the fast-paced growth of the telecom sector. Hiving off non-core functions such as network design and network management to third-party vendors has now become a very important business model to gain competitive advantage, said a telecom analyst.

For IBM, this is the third engagement with a telecom operator in India. It has had similar engagements with Idea Cellular and Bharti Airtel in the last three years.

More Stories on : Outsourcing | Telecommunications

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