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India's Vodafone Essar Signs Billion-Dollar IT Outsourcing Deal with IBM

Vodafone’s India arm, Vodafone Essar, has inked a $1 billion IT outsourcing deal with global IT giant IBM.

The deal is an extension of the previous agreement the companies had forged, with IBM managing the company’s IT systems till 2017.

According to an article on The Economic Times, Vodafone had signed a deal worth more than $400 million with IBM.

Since that deal expires next year, the companies chose to renegotiate and extend the deal. The Indian paper cited three people with knowledge of the deal claiming that it was valued anywhere between $800 million to $1 billion.

"The deal could have come up for renewal late this year if this agreement was not reached - it completely ruled out any opportunity for rival bidders," one executive familiar with the deal said.

India’s domestic IT services market is on the rise with new estimates claiming that the market will reach the $15 billion mark by 2015. Research firm Gartner claims that India’s IT services market will be worth $9.5 billion by the end of this year.