$2.5B IBM-Airtel Contract In Jeopardy As Scandal Comes To Light!


Airtel, India’s biggest telecom company had outsourced some of it’s telecom management tasks to IBM in 2004. The deal was worth more than $2.5 billion for 10 years, which made it $300 million every year outsourcing deal.

But recent allegations and accusations of scam and scandal have left this deal in jeopardy as Airtel may reduce it to $100 million per year contract.

Airtel IBM

Techcrunch has revealed that due to this scandal, IBM India has fired several top and middle level managers in the last few months, and more heads can roll to cover up this corporate scam.

When IBM India was contacted regarding this, the company spokesperson said, “IBM does not discuss details of confidential client contracts.”

What Happened?

In 2004, Airtel asked IBM India to manage its telecom networks, desktops and other software applications as part of an outsourcing deal. Along with that, IBM India was also supposed to integrate channels and customer-facing processes of Airtel to manage the tasks smoothly.

This was one of the biggest achievements for IBM India as they highlighted this deal in their business meetings and shareholder conferences.

As the 10-year contract is now about to get over, it has been revealed that the outsourced tasks of IBM were further sub-contracted to another third party IT vendor with the name of Mara Ison, which is based in Kenya.

And interestingly, Mara Ison has been founded by ex-IBMers. As per the negotiating documents, IBM India cannot sub-contract these outsourced tasks to another vendor without due approvals, which extends upto three levels.

But Anand Swaroop, CEO of Mara Ison Technologies told, “As of today, I have not received a single dollar order from IBM India.”

What Next?

As per insider sources, Airtel is now anyways looking out for other IT vendors to fulfill their outsourcing requirements. And after this corporate scandal involving ex-IBMers and sub-contracting to third party vendors, Airtel is not willing to be reliant on IBM for every outsourcing task.

Reportedly, earlier they were using IBM Lotus Notes for their internal emailing system but now they have switched over to Microsoft Outlook. More drastic changes within Airtel is now apparent as they will squeeze the outsourcing contract with IBM to $100 million annually compared to $300 million earlier.

Observation: Management team at IBM India seriously needs some big overhaul. Last month we had reported how managers at IBM have resorted to bloodbath while treating their employees and now this case of serious corporate scam involving millions of dollars.

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