Bharti may revoke IBM $2 billion contract

Bharti Airtel's landmark outsourcing contract of over $2 billion to IBM is on the verge of being reduced to just $100 million-a-year, if not revoked completely.

The contract due for renewal in 2014 was first signed in 2004 for managing telecom networks, desktops and other software applications at Bharti Airtel. Serviced by IBM India and its achievement showcase, the contract was worth around $300 million annually and over $2 billion overall.

The development became public with media reports of violation of business processes guidelines at IBM emerging along with Bharti's reluctance to renew the contract.

In gross violations of business ethics the contract was further sub-contracted to Maraison Technologies, a company that has former IBM-employees in its top management. IBM is said to follow a well-defined business processes when sub-contracting to third party vendors.

According to the first reports on the issue, published in TechCrunch, IBM India has fired almost half-a-dozen executives accused of business mismangement, in a bid to save Bharti Airtel contract and clean up its act on the internal violations of business ethics.

Meanwhile, Bharti is looking at reducing it dependence in IBM from a strategic standpoint.