Vodafone India is close to renewing a sizeable IT outsourcing deal with IBM, although the US firm might find the contract less lucrative, said Economic Times.

The final contract could be worth more than $575 million over five years, but IBM may pocket less revenue from the contract than it does from the current deal.

The US firm could receive approximately $110 million of annual revenue against the $170 million to $200 million it received from the old deal, which was worth about $1 billion in total.

The contract is expected to be announced in the coming weeks, ahead of the current contract expiring in the last week of June.

Neither company commented publicly on the negotiations.

The reason for a lower value is a combination of Vodafone taking parts of the contract back inhouse and IBM being forced to offer a discount of between 20 per cent and 30 per cent on its previous arrangement.

The Vodafone deal is one of IBM’s largest contracts with a mobile operator in Asia. The US firm also works with Bharti Airtel, India’s largest operator, which two years ago squeezed down IBM’s contract.

The original award to IBM by Vodafone was for a five-year deal for managing the operator’s IT systems, worth more than $400 million. In 2011, a new, five year deal was negotiated, worth around $1 billion.