Thursday, May 21, 2009

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Swan to outsource IT, back office work to TechM

New telecom entrant Swan Telecom is set to outsource its IT and back office functions to Tech Mahindra and award a network equipment deal to Ericsson together in a transaction worth about $250 million. The deal, the first of its kind in the telecom outsourcing sector, is aimed at bringing down operational costs and compete more effectively with incumbents such as Bharti Airtel and Reliance Communications (RCOM).

"Swan has decided to retain the computer hardware part, and decided to bundle its IT and network management contract in order to avoid a high value outsourcing deal and retain many of these functions in-house," said a person familiar with the matter on conditions of anonymity.

Traditionally, telcos such as Bharti Airtel, Idea Cellular, Unitech Wireless and Aircel have outsourced their entire IT and network infrastructure to vendors as separate contracts. However, Swan plans to retain the control of its computer hardware systems, and will make Ericsson responsible for the entire network with an IT vendor working in tandem for application development, maintenance and integration work. For instance, IBM manages Bharti Airtel's entire outsourcing of IT, back office and network management along with Nortel and Ericsson.

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