Initiate Talks With Infosys, Tech Mahindra, Wipro & IBM For Mega Outsourcing Contracts

Durba Ghosh NEW DELHI

IT FIRMS could bag outsourcing contracts worth up to $2 billion from new telecom players - Swan Telecom, Unitech Wireless, Loop Telecom, ByCell Communications and Datacom - readying to launch their services. The telcos have initiated talks with several IT vendors such as Tech Mahindra, IBM, Wipro and Infosys to sign multi-million dollar contracts.

"We will outsource all our IT operations, including setting up IT networks and managing services. We have shortlisted four IT players and are in advanced talks to finalise one of them. The size of deal will be around $600 million for about 10 years," Unitech Wireless executive director Rajeev Bawa said. The firm is expected to close the deal next month.

Swan Telecom is learnt to be in talks with IT firms, including Tech Mahindra, Wipro and IBM, for a possible outsourcing deal. As per industry sources, the telecom firm is thrashing out an outsourcing contract worth over $500 million. The company spokeswoman refused to comment on the matter.

Tech Mahindra marketing vice-president Rajesh Chandiramani confirmed the company has made presentations to ByCell and Swan Telecom. "The deals with the new telecom players can vary from $200 million to $1 billion in terms of size. We expect the telcos to decide on their IT vendors soon," Mr Chandiramani added.

ByCell's plans to outsource its IT network have been put on hold, with the company still stuck in administrative delays regarding grant of licence and spectrum. The company dragged the Foreign Investment Promotion Board (FIPB) and the Department of Telecom (DoT) to court a week ago for their failure to grant it licence and spectrum even after acquiring requisite approvals.

Sistema Shyam, which has started operations in a few circles in the country, is also exploring the option of outsourcing management of its IT network. At present, the company is operating through its in-house IT team.

"Our In-house IT Team is currently managing the network and enterprise operations. We are exploring and evaluating options between in-house, managed services and outsourcing of IT services and a partner will be chosen at an appropriate time," Sistema Shyam CEO & president Vsevelod Rozanov said.

Bharti Airtel, the country's largest cellular services provider, was the first leading operator to outsource its IT operations in 2004 in what was then a $750-million deal spread over five years. The deal later crossed $1 billion in value.

Following the suit, Idea Cellular and Vodafone signed IT outsourcing deals with the American technology major. Indian IT firm Wipro had also won a nine-year outsourcing deal from Aircel, which was estimated to be worth about $600 million.

The new telecom players such as Unitech Wireless, Datacom, S Tel and Loop Telecom received licences early last year and are under pressure to start rolling out services. According to the service conditions specified in the licence, operators are required to cover at least 10% of each district headquarters in a circle in the first year. Since the licences were given out in February last year, the DoT has proposed to impose a penalty on the new players for not meeting the roll-out obligation at the end of first year. Barring Sistema Shyam, none of the companies have launched their services yet.

IN THE LOOP
As per service conditions, operators are required to cover at least 10% of each district HQ in a circle in the first year
Telecom companies which have started discussions with IT majors include Swan, Unitech Wireless, Loop & ByCell
ByCell's plans are, however, stuck due to administrative delay
Barring Sistema Shyam, none of the companies has launched its services yet