Source: Forbes.com

Here’s a twist: an Indian company outsourcing operations to an American one.

IBM on Wednesday said it had won a 10-year contract from Indian mobile network operator Idea Cellular valued at between $600 million and $800 million.

IBM will help handle services like billing, revenue assurance, credit collection and subscriber management, and manage the Indian company’s IT infrastructure.

The deal is based on a risk-reward revenue sharing model and revenues are to an extent dependent on the revenues and expansion of Idea Cellular, India’s fifth-largest mobile operator with 14 million subscribers.

It’s a unit of the multibillion dollar Aditya Birla Group.

IBM employs about 53,000 people in India, second only to the U.S., where it has 125,000 employees. At IBM’s annual investor meet in Bangalore last year, CEO Sam Palmisano had said the company would invest $6 billion in India over three years through 2009 to expand service centers catering to customers globally.

In 2004, IBM won a similar order from Bharti Enterprises, which operates India’s largest cellular service provider, Bharti Airtel. That deal, also over 10 years, was valued at $750 million.

Wednesday’s deal reflects a turn in the outsourcing story in India, which made an impact globally over the past 10 years as a destination for Western companies looking to offshore support functions.

With the economy growing rapidly, a number of Indian companies have expanded to the point where they too are farming out support services to local partners or multinationals with Indian operations.

India enjoys an unparalleled reputation as an outsourcing destination for the high-tech sector and the Diaspora of homegrown computer programmers has long been transforming the global economy.

But some European entrepreneurs are turning the globalisation equation on its head, recognising India as a bold, hungry market that is likely to assert itself in new ways and eclipse much of the West in the coming years.

Employees of the German unit of outsourcing giant Hexaware now spend months at a time living in India, taking a pay cut as they draw an Indian salary and live in average Indian apartments to get a taste of real life in the country.

“Our staff has to understand the culture and system in India. You can’t do that over the phone or a brief induction training course,” Gerrith Hermes, the CEO of Hexaware’s German unit, said at the world’s largest high-tech fair, the CeBIT.

“You need three or four months living and working in India to begin to understand how people react there and why some approaches work better than others,” he said.

Hexaware is an Indian company that employs some 150 people in Germany — a reversal of the standard globalisation set-up in which Western companies cut costs by sending jobs to low-salary, low-cost markets such as India.

Hermes says Hexaware’s practice of sending its German staff to India to watch and learn is less a quirk than a preview of rapidly changing dynamics in the 21st century economy.

“I could well imagine that in the next few years German students won’t necessarily do internships at German companies but rather go to India,” he said.