India’s top mobile phone firm Bharti Airtel said it will award call centre contracts for its African operations to IBM, Tech Mahindra and Spanco, marking the second significant step in replicating its hugely-successful outsourcing model in that continent. Bharti Airtel’s international CEO Manoj Kohli and other officials with the world’s fifth-largest telco by customers declined to divulge the deal size, but an industry executive with direct knowledge of the development said the five-year contract was worth around $500 million, with IBM and Spanco sharing most of the spoils.
The largest market of Nigeria is also split between these two vendors. “Both have approximately $200 million each, while Tech Mahindra has about $100 million,” this executive said, requesting anonymity. The contract for customer services is the first of its kind in Africa where the back-office processing industry is still in the early stages of evolution.
Last month, Bharti Airtel took the first step to exporting its business model to Africa by awarding a $1.5-billion contract to IBM for managing its IT requirements across 16 countries in the continent. Outsourcing of all key operational functions, a concept pioneered by Bharti Airtel, is the key to the telco’s low-cost high-volume business model that enabled it to build a subscriber base of around 150 million customers in India. Replicating this model in Africa will be the key to the profitability of Bharti’s loss-making African operations, which it bought from Kuwaiti telco Zain in a $10.7-billion deal earlier this year.
Telecom analysts say the next major deal for Bharti will be an over $2-billion network outsourcing contract, which will be for 3-5 years. Ericsson and Nokia Siemens, Bharti’s partners in India, remain favourites to win the deals, but the Indian telco will float tenders presenting an opportunity to other equipment vendors such as Huawei, ZTE and Alcatel-Lucent. Mr Kohli said the widespread adoption of the BPO model by Bharti Airtel across its operations will also have tangible benefits for the development of the sector in each country, create additional job opportunities and develop local talent.
“About 4,000 employees who currently handle Zain’s customer care operations in Africa will move to the rolls of these three companies. The partners will set up operations in each market which will sustain and build skills, capabilities and resources,” he added. Executives tracking the contract said local companies in Africa had not bid for the call centre deal although Spanco and possibly, Tech Mahindra, could partner with domestic firms there to deliver the service.
It is also learnt that Firstsource and Aegis, Bharti’s call centre partners in India, were also in the race for the African contract. “However, their bids were not as competitive as Spanco and IBM. Bharti is a sophisticated buyer of IT and customer services. It wants quality at the best prices. In many ways it is like a British Telecom or a General Electric — it drives a hard bargain and doesn’t leave much margin on the table for its suppliers,” said a person familiar with Bharti’s outsourcing strategy.
Tech Mahindra’s vice-chairman, Vineet Nayyar said the deal would help Bharti scale quickly to manage its expected growth while adding that customers would receive first class service to global standards. “IBM’s strategic relationship with Bharti Airtel illustrates its focus on emerging markets like Africa,” said John Lutz, general manager, IBM Managed Business Process Services. IBM also handles part of Bharti’s customer care operations in India. Kapil Puri, chairman and managing director, Spanco was of the view that Bharti’s decision to take this business model to Africa could create an outsourcing industry in there. “With its advantages of time zone location, multi-lingual fluency especially in English and French, operational cost and robust network infrastructure, Africa can grow as a world class off-shoring destination for global organisations.
Source:http://economictimes.indiatimes.com/tech/ites/Bharti-splits-500-mn-outsourcing-deal-in-Africa-among-3-IT-majors/articleshow/6812374.cms
