Vodafone signs $550m deal with IBM to offload cloud biz

Up to 750 staff transferring to Big Blue. Good luck people... you might need it

Exclusive Vodafone is offloading its cloud and hosting unit to IBM in a $550m eight-year outsourcing deal that will include up to 750 staff packing their bags as they're sent off to new employer Big Blue, sources say.

A Voda employee rep is to be elected from the start of February and consultation with the telco's HR, management, and senior folk at IBM will take place in between then and May, when the new service starts.

The commercial agreement will see transferred employees, including people in delivery, operations and technical sales consultants, continue to deliver support to Vodafone, insiders told The Reg.

"The Vodafone private cloud product will continue to be supported and even sold to support current commitments, but, thankfully it will be eventually taken out the back and given the bullet," one said.

Existing Vodafone customers will not be "compelled" to move to the new solutions, but migration will be in play where necessary.

Expectations are that IBM will expand the breadth of products by selling multiple consumption types - private, public, hybrid.

"Expect a very blue range of products and services in the portfolio," a contact added. "Vodafone's private cloud products were tired and years behind [the market]. We figured we couldn't catch up and needed some help. A move like this has been on the cards for a long time and is zero surprise to anyone."

Some feel that Vodafone has failed to understand the cloud and this limited innovation and the speed of execution. A lack of professional services to support the sales may not have helped.

"We could only sell technology products and [even] that was not in a joined-up way," a Voda cloud rep said.

Voda staff have read El Reg's coverage of IBM's relentless redundancy programmes in recent years and are concerned about being edged out after the eight-year agreement concludes - assuming they last that distance. Others of course may choose to move to another part of the telco, if they have the option.

Obviously, Vodafone's assessment of its cloud services business is vastly different to the picture painted by employees. A company mouthpiece told us:

"As part of the agreement, some Vodafone employees will be invited to move from Vodafone to IBM. IBM and Vodafone are currently evaluating roles and expertise needed within each organisation."

Our Vodafone insiders said they had not been told of the evaluation process and voiced concern about an implication that some of the roles moving to IBM might not be filled if they have yet to be defined or finalised.

"Being a spare part at IBM isn't a good place to be," said one.

Vodafone's spokesman claimed the IBM agreement "builds on the success of our cloud business and deliver on our strategy to simplify our overall business". Apparently, Vodafone sees this as taking a "bold step" to speeding with cloud growth and benefiting from IBM's "deep industry expertise".

"Our customers will benefit from IBM's multi-cloud and managed services capabilities to enhance the solutions they have today. And in the near future, we will together develop a range of innovative digital solutions across a number of different industries."

Our Vodafone insiders said that both Vodafone and IBM will sell the services in a co-led model, but the telco's PR rep claimed his employer would be the "primary customer-facing party that customers will normally contract with".

So effectively, Vodafone will become a reseller of its private cloud and IBM's cloud suite, Vodafone sources said.

In addition to the cloud agreement, IBM and Vodafone are linking arms to create "solutions" for enterprise customers in SDN, AI and 5G. ®