Wipro extends deal with Telefonica/O2 with 5G focus

Indian IT services provider Wipro Ltd said it has refreshed its 15-year engagement with Telefonica Germany with a focus on enabling new services in the 5G era.

The program “will ensure that Telefónica Germany / O2 is well positioned to modernise and launch a range of new offerings including 5G products and services,” the Indian company said.

Wipro called it “a high value and first-of-its-kind engagement for Wipro in the telecommunications space”.

While the financial details of deal were not announced, the Indian company did say that the new deal will reduce costs further for Telefonica.

“As 5G networks and new IoT connectivity solutions start to roll out, this refresh provides not only an essential foundation for the new services but also enables new ways of work at a significantly lower cost of ownership to Telefónica Germany / O2,” it said.

The company also indicated that the engagement has been made more ‘outcome-based’. Typically, companies are converting earlier, fixed costs-models of engagement and outsourcing to outcome-based models, where the partner is typically paid a part of the savings delivered to the client.

Outsourcing and support partners can earn significantly more from such engagements if they are able to reduce costs drastically for the client, but their revenue depends purely on performance. Such deals are, therefore, often called self-funded, as the partner gets paid a share of the savings it generates.

Indeed, Wipro said the new structure will “allow for risk-mitigated self-funded transformation that will benefit both companies.”

Wipro said it will also “invest in” developing a state-of-the-art digital Business Support platform that will “fuel” Telefónica Germany’s growth and “provide the company with an outcome-based, committed plan”.

Thierry Delaporte, Chief Executive Officer and Managing Director, Wipro Ltd, said the deal builds on the bedrock of a 15-year relationship between the two companies.

“It directly aligns us with Telefónica Germany’s growth, and is a great example of how we are building for long-term success in Europe by embracing a collaborative approach with local industry leaders.”

Telefónica CTIO Mallik Rao called the business transformation project is “a key milestone” which would enable his company to increase the reliability of its systems, improve customer satisfaction and accelerate innovation.

Telefonica Germany is the country’s largest wireless services provider with 44 million mobile and 2.3 million broadband connections.

It has been listed on the Frankfurt Stock Exchange (MDAX) since 2012.

In the 2019 financial year, the company generated revenue of EUR 7.4 billion with almost 8,500 employees. The company is majority owned by the Spanish telecommunications group Telefónica S.A.