Bharti Airtel Outsourcing

* Bharti Airtel aimed to be a low exist provider in the spiritedly nifty intensive telecom industry. They needed to keep rate with the rapid growth of their customer base, which was growing at almost coulomb percent per year. Their strategy was to acquire b be-assed customers and achieve low cost per minute, but it required huge capital investments. * They outsourced everything and concentrated only on marketing, sales and distribution. They redefined the core activities in telecom industry and concentrated either their resources in acquiring and retaining customers. there were two parts to the Outsourcing love among Bharti and telecom vendors. First was build up, maintenance, and servicing of the telecom entanglement to equipment vendors Nokia, southward and Ericson. Then there was the regard with IBM to provide solely in all IT solutions. 1) Advantages of Outsourcing their Network conductment to Ericsson, Nokia, & Siemens * Keeping pace with net involution due to faster installations. * Freed the management of time consuming budgeting, tendering, financing, purchasing and episode process.They could straightway focus on core competencies of the company. * Shift from short-term agreements with equipment vendors to massive term commitments to get better bargains and service. * Bharti will pay for network skill (erlangs) only when it up and running. No need to pay for un employmentd capacity. This re moldd the problem of conflict of interest between Bharti and the network suppliers. * Increased flexibility, no need to make huge capital investments will enable transferring of the find to the network supplier. No Production be( no capital investments, no labor movement be), reduced Transaction cost as no need for advanced tenders every six months( reduced search & come costs, reduced enforcement costs because of implementation of relational governance, lower adaptation costs because of pay for use sham) * They were able to achieve Pred ictable Cost Model, no unplanned expenditures. purpose the savings in capital expenditure in focusing on new customer acquisition, building new function etc. Disadvantages of deal with Ericsson, Nokia, & Siemens The project might be difficult to manage and receive increasingly complex because of the involvement of 3 vendors to provide the network management. * There might be resistance from the existing employees to get transferred to vendor companies because of the heathenish barriers that whitethorn arise. * There is a chance of developing rivalries among the 3 vendors if the margins and challenger starts getting stiff. * Wastage of installed capacity. * It will increase their dependence on vendors. After a period of time they may move on the back stern in negotiation meetings with vendors. No previous deals of such outsourcing has happened and hence take a chance is high Advantages of end to end IT management Outsourcing deal with IBM * Airtel can now concentrate on their core business activities of marketing and sales. * Revenue manduction agreement thus there was big incentive for IBM to make the outsourcing deal a success. Reduced opportunism by the vendor. * Solved the scalability solvent. * Avoid major increases in capital expenditures in IT. * Gain access to IBMs well-off talent pool, IBMs expertise in IT. They can work unitedly to create new products and services. (Value added services). * No Production costs ( no capital investments, no labor costs), reduced Transaction costs (reduced search & contract costs, reduced enforcement costs because of implementation of relational governance, lower adaptation costs because of revenue sharing model). Disadvantages of deal with IBM * Excessive dependence on IBM and if they are not able to provide many modernistic solutions, then Airtel wint be having any option to go with a new vendor. There was a concern that the applications not supported by IBM may become obsolete * Revenue sharing was a new model which Airtel and IBM were trying for pays. As both of them didnt have any drive in it, there was a considerable risk because of the unforeseen uncertainties. 2) How would you complex body part the agreements to address your concerns and capture any advantages you have identified? Structure of cartel with IBM * There should be some provision of fixed and minimum costs for the revenue share in the agreement. IT applications not supported by IBM should be available to ensure they dont get obsolete. * The terms and conditions in the contract should be flexible enough to cover the changing environment dynamics over the period of 10 years. * Furthermore not all the details of the partnership can be written in the agreement. So a joint governing body should be formed to manage the arrangement and resolve the issues. * Agreed metrics to cadency the quality of IT services provided by IBM. Structure of Agreement with Ericsson, Nokia, & Siemens Network and Operations solicitude s hould be transitioned to the vendors in a phased and planned manner under constant quantity observation. * To tackle the concern of cultural barriers while working for the vendors, the Airtel employees should be cloaked on the same TnCs as they were working in Airtel. * Further recruitment of new employees should be the responsibility of vendor. * The expectations and duties of all the 3 vendors should be right on outlined and explained to prevent development of unnecessary tensions and unhealthy competition among them. The vendors should be continuously monitoring the networks and provide rapid response once the issue has been identified by them. * To be fair with the vendors if the network capacity quell unused for a major period of time, some part of payment should be done to them or it can be redeployed at some other sectors. What measurements, rewards and penalties, and other governance mechanisms would you design for these two different agreements? With IBM * Strategic c oalition Measurements Process Performance Metrics % of orders not delivered within the promised date, % of inaccurate and broken orders, Percentage of escalated cases, Through output. * Metrics to measure innovation No of innovative ideas provided over a period of time. Ericsson, Nokia and Siemens * Performance Measurement and persona Metrics bellyache drop rate in the peak hours, Call drop rate over a cellular circle, Average growth Resolve time, amount of time (measured in milliseconds) taken by entropy to travel from one location to another across a network etc.Penalties on the vendor if the performance of a cellular circle is not good over a period of time due to high call drops. * Customer Experience and Satisfaction Measurements -Network Availability, Call Accessibility measure eg. how many customers fail to make a call in the early attempt , Call Retainability, voice quality etc. * Management of Resources exercise of resources, Amount of time taken to meet request or demand, capableness of the resource etc. Reward and appreciation for the employees who are able to solve the issues in minimum time. * Risk assessment Security over the network etc.