Bharti Airtel dithers on renewing IBM contract

IBM India has apparently fired some of its key executives for a reason which appears to be a classic case of forgery in the $2 billion contractual business with Bharti Airtel, according to a story reported on Tech Crunch on March 25, this year.

The story which quotes half a dozen sources, including some of the company's executives, 'confirmed that around nine IBM India officials being investigated for 'process violations' have been fired.' The story also reports,'The specific charge being leveled internally is called the business conduct guideline violation,' quoting one of the sources.

The situation turned grey when the portal stated that the majority of the business was also sub-contracted to Mara-ISON-a company owned by ex-IBMites.

According to the the portal, Several IBM insiders and some officials at Airtel confirmed the record that there are 'conflicts of interest' about the decision to subcontract work to Mara-ISON.

The DQ Week, however, has not been able to verify from IBM or any other sources. Also, it is not clear about the quantum of money siphoned off in the case.

IBM has started investigations to understand why a particular subcontracting firm, Mara-ISON (whose management mostly comprises of former IBM India executives) was given a chunk of the business.

Several IBM insiders and some officials at Airtel confirmed off the record that there are 'conflicts of interest' about the decision to subcontract work to Mara-ISON.

The renewal process of the deal also seems to be hit. According to the portal, Airtel prepares to announce renewal of this 10-year-old contract and 'IBM's share of the business is set to be reduced to around $100 million annually', as confirmed by three people familiar with the discussion to the portal.

The original contract was signed in 2004 for managing 'telecom networks, desktops and other software applications at Bharti Airtel'.

"The Bharti contract renewal has already undergone over a dozen iterations; it was supposed to get signed and announced weeks ago. Ongoing investigations into ‘unprofessional conduct' of some IBM-ers and customer staff has made it a contract everybody wants to sign, but with conditions that reflect lack of trust," the portal quotes a person familiar with the issue.

According to the portal, IBM will not have the freedom to take independent calls on "subcontracting work, or buy hardware and software solutions as part of the contract."

Instead, 'a committee of executives from both IBM and Bharti will make joint decisions about what products to procure and how.'