How, IBM, helping, Airtel?

Bharti Airtel is the leading telecom player in India and it became so by focusing on its strengths. It also knows who the expert is when it comes to building reliable IT systems. Airtel took the help of IBM to scale its operations quickly and stayed ahead of the competition.

Airtel operates in all the 23 circles in India and has recently expanded to Sri Lanka. It operates in all verticals of landline, mobile and Internet. If you are the leading operator in the world’s fastest growing telecom market there will be risks.

The biggest risk Airtel has is the competition which has reduced the Average Revenue Per User (ARPU). This risk is compounded when have a unfavorable regulatory working in favor of PSU’s.

How can Airtel stay competitive with all the pitfalls? It cuts costs by outsourcing IT operations and scales up faster than its competition. It does with the help of IBM - which knows best in dealing with a company growing exponentially.

This Whitepaper from IBM explains what are the unique challenges Telecom operators in India face and how Airtel and IBM came together to build a better company. Few highlights from the paper :

1.  
   1. Ability to process 1.5 million new customers per month
   2. Improved cross-selling and targeting and a more seamless, efficient total customer experience through end-to-end integration of customer-facing processes
   3. Optimization of business processes and infrastructure through flexible, standardized integration framework
   4. Outsourcing of technology enables Bharti Airtel to focus resources on growing the business
   5. Flexible pricing model enables Bharti Airtel to avoid major increases in capital expenditures

The threshold of 1.5 million new customers per month is broken and Airtel is now processing 2 million new customers per month. I am sure IBM’s systems are scalable. IBM took over a new outsourcing contract from Airtel.

Bharti’s independent tower business, Bharti Infratel has outsourced its IT operations to IBM. The deal is estimated to be 250 crores but in all likelihood that will cross. The $750 million outsourcing contract signed in 2004 has crossed $2.5 bn at the end of 2009.

There are several other things involved in a Airtel-IBM collaboration :

1. A $100 million service development platform for all its services. Think of it as value added services for mobile, DTH and broadband.
2. A $150 million deal for the IT operations of Airtel’s DTH and IPTV services.
3. IBM Daksh, IBM’s BPO arm in India will be offering back office services for Airtel’s operations.
4. IBM also manages Airtel’s operations in Jersey and Sri Lanka. (source)

Most of the new operators have taken a leaf out of Airtel’s book. They are outsourcing IT operations before even rolling their network.

PS 2 :This might be a little known fact. Bharti Airtel operates in the island of Jersey under its subsidiary Jersey Airtel. This was Airtel’s first overseas operations before Sri Lanka. It took a while for me to find the Island of Jersey. It is south of UK and north-east of France in the Atlantic Ocean.

PS 1 : Who is the biggest software vendor for IT services in India? If you have guessed it as any Indian vendor then you would be so wrong. With close to 13% market share, it is IBM. How did that happen? IBM has the first mover advantage which coupled with gross neglect of Indian IT vendors on India played into IBM.