Etisalat DB Telecom is outsourcing the implementation of its information technology applications to Tech Mahindra. The deal, valued at $400 million (about Rs 2,000 crore), is spread over 10 years. Etisalat DB Telecom is a joint venture between the United Arab Emirates-based based Etisalat group – which holds a 45 per cent stake – and the India-based Dynamix Balwas Group.
In a statement, Etisalat DB Telecom, which plans to start mobile services in 15 telecom zones in India later in 2009, said that the outsourcing deal would include implementation of its end-to-end IT applications and infrastructure, managed services, and system integration.
Under the agreement on outsourcing, Etisalat DB Telecom and its subsidiary Allianz Infratec will outsource IT application systems and system integration across 15 telecoms zones in India to Tech Mahindra. The chief IT applications, according to the statement from Etisalat DB Telecom, involve Operating Support System (OSS) domain and components in Business Support System (BSS).
Etisalat DB Telecom said that the alliance with Tech Mahindra would help speed up market as well as cost efficiencies for Etisalat’s greenfield venture.
While Allianz Infratec holds licences and spectrum for the Indian states of Madhya Pradesh and Bihar, the rest 13 telecom zones are held through Etisalat DB Telecom.
An official of Etisalat DB Telecom told reporters that Tech Mahindra has the necessary domain and process expertise, with a proven track record as a part of Etisalat’s launch of operations in Egypt.
Etisalat DB Telecom, he added, is confident that Tech Mahindra’s “comprehensive pool of IT skills and innovative delivery models” would help Etisalat in the planned rollout of services in India and also “deliver the best services and customer experience in the market.”
In a press release, Sanjay Kalra, chief executive officer of Tech Mahindra, said that, after successfully partnering with Etisalat for the launch of its greenfield operations in Egypt, Tech Mahindra expects to expand the relationship between the two companies in India’s high-growth telecom sector.
Telecom providers in India have been outsourcing their IT infrastructure increasingly since it would allow them to be light on asset and also focus on their core competencies.
This trend of outsourcing was set in motion by a deal struck between Bharti-Airtel and IBM – the deal now having grown to worth over $2 billion. Since then, most of the telecom companies in India have resorted to outsourcing.
Wipro recently obtained a Rs 2,500-crore deal from Unitech Wireless. While Aircel Cellular awarded a deal worth $600 million to Wipro in January 2008, Idea Cellular, the company owned by the Aditya Birla group, signed a 10-year IT outsourcing deal (worth $600 million-$800 million) with IBM.