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IBM Wins Deal to Manage Firm's IT Unit

IBM Corp. it has won a 10-year contract to manage the IT infrastructure of Indian mobile company Idea Cellular

(New Delhi) IBM Corp. said Wednesday it has won a 10-year contract to manage the information technology infrastructure of Indian mobile company Idea Cellular in a deal valued between $600 million and $800 million.

The agreement with Idea Cellular Ltd., India's fifth-largest mobile phone company with 14 million subscribers, covers its existing operations and potential new additions, International Business Machines Corp. said in a statement. The deal also involves some back-office operations.

The contract reflects IBM's efforts to win more business within India, where it is investing $6 billion over three years through 2009 to expand service centers catering to customers worldwide.

It also marks a twist in the trend in which major Western companies have looked to Indian outsourcing firms to handle software design, customer calls and other jobs. With the rapid growth of the economy, Indian corporations also are farming out technology-related aspects of their businesses--in some cases handing the work to global companies with outsourcing centers in India.

IBM, the world's largest computer service company, now employs about 53,000 people in India, second only to the United States, where it has about 125,000 employees. However, Indian sales account for less than 1 percent of IBM's global revenue.

In 2004, IBM won a similar outsourcing order from Bharti Enterprises, which operates India's largest mobile phone company. That deal, also spread over 10 years, was valued at $750 million.

Idea Cellular is a part of the Aditya Birla Group, a leading Indian business conglomerate with $12 billion in revenue and interests spanning cement, textiles and petrochemicals.

IBM said there was no precise figure for the size of the deal because the agreement calls for the company to get paid more for its services if Idea's revenues grow faster than certain forecasts.

Besides managing Idea's IT infrastructure, IBM will also provide technology that will help the mobile phone company handle billing and credit collection, manage fraud and customer relationships and provide self-care to customers.

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