Vodafone Idea expands IT outsourcing, reduces IBM dependency
GANDHINAGAR, INDIA — Vodafone Idea is poised to finalize its new IT outsourcing agreements this month, marking a significant strategic shift from its previous reliance on IBM.
The Indian telecommunications company is engaging a broader array of vendors to handle various components of its IT operations. This move aims to reduce overall operating costs and enhance efficiency by leveraging specialized expertise.
Transitioning from IBM to a diverse vendor base
The renegotiation follows the expiration of Vodafone Idea’s five-year, $800 million outsourcing contract with IBM in April 2024.
Instead of renewing the entire contract with IBM, Vodafone Idea is diversifying its vendor base. The company plans to involve multiple vendors in managing specific areas of its IT infrastructure.
Sources familiar with the discussions told Moneycontrol that the new contracts are expected to be finalized within the next 10 days
“Most components will be outsourced again, except for certain managed services handled by Tata Communications Transformation Services (TCTS). All transport and mobility are insourced in terms of network operations,” one insider stated.
Strategic moves for enhanced efficiency
Vodafone Idea’s decision to incorporate more vendors stems from its objective to unlock cost and operational efficiencies. By engaging specialized providers, the telecom company aims to achieve better results at reduced costs.
“There will be a big discount on the deal size for Vodafone Idea compared to the previous deal with IBM,” noted another source.
This strategic shift follows TCTS’s termination of its contract with Vodafone Idea due to unpaid dues amounting to Rs 221.19 crore (US$26 million). The new outsourcing arrangement forms part of Vodafone Idea’s broader strategy to strengthen its IT infrastructure in support of its expanding 4G network and upcoming 5G rollout.
Aligning with network expansion plans
The finalization of these IT outsourcing deals also aligns with Vodafone Idea’s ambitious three-year capital expenditure plan of $6.6 billion. This plan includes expanding 4G population coverage from 1.03 billion to 1.2 billion and launching 5G services in key Indian markets.
Recently, Vodafone Idea concluded a substantial $3.6-billion three-year agreement with Nokia, Ericsson, and Samsung for 4G and 5G network equipment.
These combined efforts in network expansion and IT outsourcing are crucial as the company prepares for a competitive landscape in India’s telecom sector.
