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IBM in talks with Vodafone unit for India outsourcing

BANGALORE — IBM aims to grab more outsourcing deals from Indian telecoms companies and is in talks with the Indian unit of Vodafone Plc, a senior official said yesterday.

India is the world's fastest growing mobile market, adding more than 6 million users a month, and telecoms companies are stepping up investment on technology. India had 130.6 million mobile subscribers on the popular GSM platform at end-May. "My feeling is that in the next 18 months, at least two more operators should be settling for outsourcing," Vivek Gupta, director of communications sector at IBM India and South Asia, told Reuters in an interview.

"We would be extremely disappointed if we are not the key player there. From my perspective, I want to grab 100 per cent of the business."

International Business Machines Corp. of Armonk, New York, is in talks with unlisted Hutchison Essar Ltd., in which British phone firm Vodafone bought a controlling stake this year, for an outsourcing deal, Gupta said.

He did not give details.

Last year, Vodafone outsourced key IT functions to IBM, the world's largest technology services company, and Electronic Data Systems Corp.

IBM, which employs 53,000 staff in India that accounts for 16 per cent of its global workforce and makes it the company's second-largest operation after the United States, has been winning large telecoms outsourcing deals in India.

In March, India's fifth-largest mobile phone firm, Idea Cellular Ltd., signed a 10-year pact to outsource some of its operations like managing IT infrastructure and billing services to IBM in a deal valued at up to $800 million.

On Thursday, IBM said it had signed another 10-year deal worth $53 million with Idea for an interactive voice response transformation project.

IBM had signed a 10-year, $750 million, deal in 2004 with top mobile services firm Bharti Airtel to manage its IT infrastructure. It is now estimated to have gone up to about $1.5 billion due to robust growth in Bharti's subscriber and revenue.

"Telecom is a very fast growing market in India and this is bringing in enormous opportunity... Our intent is to grow outsourcing business in India with rest of the telcos also," said Gupta.

"Since the market visibility is very high (and) customers are giving very good reference about us, I think we should be increasing our market dominance for India much more in future."