The move by Bharti, one of the most aggressive Indian telecom players, to outsource its IT needs to the US firm comes amid a raging controversy in the United States about jobs being shifted to India and other developing nations where labour is cheaper.
"Arrangements like this will take the sting out of outsourcing," said Sunil Bharti Mittal, chairman of Bharti Televentures.
Bharti said IBM would now take care of all Bharti's hardware and software requirements, consolidate its data centres, information technology (IT) help desks and disaster recovery capabilities.
"The IT piece is critical in the telecoms jigsaw. Bharti will henceforth stop buying IT telecom, it will stop maintaining IT equipment. We are putting that responsibility on IBM," said Mittal.
"All we know is that we will have IT on tap - and we are sure that if we have to start servicing 25 million customers from our current levels, IBM will be there to support us on the IT side."
"It is a significant deal - a lot of telecom firms are now watching our relationship"
general manager, IBM
"We're outsourcing the management of our desktop IT environment to improve cost efficiency and service flexibility," he added.
Colleen Arnold, general manager of IBM, said that this was one of the "largest and most exciting deals" that IBM had pulled off in South Asia.
"It is a significant deal - a lot of telecom firms are now watching our relationship," said Arnold.
Under the 10-year contract, 200 Bharti computer engineers will be transferred to IBM but some of them will still work on the premises of the Indian group.
"Based on the estimates agreed between Bharti and IBM, the total deal for the first five years is estimated to be $250m to 275m. For a 10-year period, the total deal is likely to be in the $700-750m range," said Mittal.
Bharti has six million mobile subscribers and 544,900 fixed-line
The deal marks a reversal of the trend in which US firms outsource work to India which has the largest pool of English-speaking graduates outside the US that are willing to work for wages that are far less than those paid in the West.
The issue of outsourcing, creating fears of widespread job losses, has generated huge controversy in the United States in a presidential election year.