New telcos may ring in $2 bn IT deals

IT firms could bag outsourcing contracts worth up to $2 billion from new telecom players like 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 of 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 negotiating an outsourcing contract worth over $500 million. The company spokeswoman refused to comment on the matter. Tech Mahindra marketing vice-president Rajesh Chandiramani confirmed that the company has made presentations to ByCell and Swan Telecom. “Deals with the new telecom players can vary from $200 million to $1 billion in terms of size. We expect 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 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.