Aircel and Wipro were engaged in a technology outsourcing contract that was recently renewed as confirmed by both the companies. The contract was estimated to be worth approximately Rs 500 crore. The timeline of the renewal was spread over five years. Both the concerned companies, however refused to comment on the estimated value of the deal.
A deal inked in 2008
Aircel’s initial contract with Wipro, inked in 2008 was meant to pan over a period of nine years. Aircel however chose to cut short the initial contract as the company was undergoing a paradigm shift. The carrier chose to streamline business efforts and cut costs where possible.
A new contract era for the telecom industry
The latest proposition of work is focused on improving and working on basic data and voice. The earlier stringent focus on applications and content has not carried over into the latest contract.
Apart from the contract renewal between Aircel and Wipro, the outsourcing contract between Idea cellular and IBM was also renewed this year. Deals such as these represent a slew of second generation outsourcing deals that are seeing renewal or extension before the contract expires. The renewal maybe attributed to the IT vendor industry seeking to retain clients in a hostile economic environment.
The telecommunication industry
Prashant Singhal, global telecommunications markets leader, EY was quoted as saying, “Telecom is moving from a growing-to-mature industry, so players will have to start making these investments. Voice will continue to be a growth engine but data will be an equally important growth engine.”
Fierce competition is ruling the roost in the telecom and outsourcing industry. The industry insiders are predicting a championship of competition when the country’s largest telecom operator Bharti Airtel’s contract with IBM will be eligible for renewal in April 2014. The main competitors to IBM seem to be Wipro and Tech Mahindra.