Vodafone plans to complete IT outsourcing agreements this month and adds suppliers to reduce its reliance on IBM.
Instead of renewing the full agreement with IBM, Vodafone Idea has decided to work with specialized companies in particular fields and engage more suppliers in order to reduce total operational expenses.
As Vodafone Idea’s multi-year IT outsourcing agreements come to an end, other companies will step in to partially replace the old arrangement with US IT giant IBM. Moneycontrol was informed by people with direct knowledge of the talks that the new contacts will be finalized in the upcoming ten days.
Sources claim that the renegotiated agreement will lessen Vodafone Idea’s reliance on IBM. Instead of renewing the whole agreement with IBM alone, the telecom business has decided to cooperate with specialized corporations in particular sectors and include other suppliers in order to reduce total operating expenses.
“The agreement is nearly complete and will be finalized in ten days. With the exception of some managed services provided by Tata Communications Transformation Services (TCTS), the majority of components will be outsourced once more. In terms of network operations, all mobility and transportation are insourced, a source informed Moneycontrol.
The telecom operator’s fiber assets were mostly operated and maintained by TCTS. The contract was terminated by the Tata Communications business after Vodafone Idea failed to pay Rs 221.19 crore in arrears, up from Rs 171.5 crore in March of last year.
In April 2024, the $800 million, five-year IT outsourcing agreement with IBM came to an end. However, according to reports, the addition of suppliers will result in a much lower value for the renewed contract with IBM.
“Compared to the last agreement with IBM, Vodafone Idea will receive a significant reduction on the contract size. In order to include more suppliers, Vodafone Idea had divided the request for proposals (RFP). “Under the new arrangement, the telco will have more vendors than under the previous arrangement with just IBM,” the second individual stated.
“The objective of bringing in new vendors is to engage specialized providers in particular areas who can deliver better results at lower costs,” the individual continued.
According to the individuals mentioned above, these actions are expected to increase Vi’s production and uncover cost and operational savings. Up until the time of publication, IBM and Vi had not responded to inquiries.
Vodafone Idea has to improve its IT infrastructure to support its growing 4G network and get ready for the anticipated 5G rollout in the top 100 cities within its 17 priority markets, therefore the impending IT outsourcing agreement is essential.
The telcos signed a massive $3.6 billion agreement with Nokia, Ericsson, and Samsung to secure 4G and 5G network equipment over three years prior to the renewal of the IT outsourcing contract.
The network and upcoming IT outsourcing agreements are included in the company’s $6.6 billion three-year capital expenditure plan, which aims to launch 5G in key markets, increase capacity in tandem with data growth, and increase the 4G population coverage from 1.03 billion to 1.2 billion.
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