IBM in $1.5-bn deal to handle Bharti’s Africa operations
21 Sep 2010
India's top mobile phone firm Bharti Airtel is all set to replicate its hugely successful outsourcing model in Africa with the award of a $1.5-billion contract to IBM for managing its IT requirements across 16 countries in the continent.
Under the 10-year deal IBM will consolidate Airtel's IT operations in Africa into a single integrated system. IBM also coordinates Bharti's information technology requirements in India, Sri Lanka and Bangladesh under a deal signed in 2004 which is said to be worth at least $3 billion.
Bharti's international operations, chief executive Manoj Kohli said this would be the first of many strategic partnerships in Africa. He added that in the next quarter there would be many more exciting announcements of partnerships the firm will have in Africa. He added the partnerships would help the telco replicate the magic it created in India.
Bharti Airtel pioneered the concept of outsourcing of all key operational functions, which is key to the telco's low-cost high-volume business model with which it has built a subscriber base of over 140 million customers in India.
Replicating the model in its African venture would play a key role in determining the profitability of Bharti's loss-making African opearions. Bharti bought Zain from Kuwaiti telco Zain in a $10.7 billion deal.
Bharti Airtel had invited bids for the deal in April in an attempt to get a better deal than the one with IBM for its Indian operations.
Accenture, Wipro and Tech Mahindra, which made it to the last lap, failed to make the cut according to an executive familiar with the negotiations between Bharti and IT vendors.