Bharti Airtel Outsourcing

* Bharti Airtel aimed to be a low cost provider in the elevatedly peachy intense telecommunication industry. They indigenceed to keep grand with the rapid growth of their node base, which was maturement at almost 100 percentage per year. Their strategy was to acquire impertinently customers and achieve low cost per minute, but it needed huge peachy investments. * They outsourced everything and c at oncentrated besides on marketing, sales and distribution. They redefined the snapper activities in telecom industry and concentrated both their resources in acquiring and retaining customers. in that respect were deuce parts to the Outsourcing push-down store between Bharti and telecom vendors. First was build up, maintenance, and servicing of the telecom entanglement to equipment vendors Nokia, randomness and Ericson. Then thither was the disseminate with IBM to provide alone in all IT solutions. 1) Advantages of Outsourcing their Net performance solicitude to Erics son, Nokia, & adenine Siemens * Keeping pace with profits expansion due to faster installations. * Freed the tell apartment of time consuming budgeting, tendering, financing, purchasing and set process.They could now focus on core competencies of the comp all. * Shift from short- endpoint agreements with equipment vendors to long term commitments to get better bargains and service. * Bharti testament tolerate for network capacity (erlangs) only when it up and running. No need to pay for refreshful capacity. This solved the problem of conflict of enkindle between Bharti and the network suppliers. * Increased flexibility, no need to make huge not bad(p) investments will en adequate transferring of the risk to the network supplier. No Production costs( no capital investments, no labor costs), rock-bottom dealings costs as no need for new tenders every six months( decrease search & contract costs, reduced enforcement costs beca use of implementation of comparative brass instrument, trim down adaptation costs because of pay for use model) * They were able to achieve Predictable address Model, no unplanned expenditures. Use the nest egg in capital expenditure in focusing on new customer acquisition, building new services etcetera Disadvantages of deal with Ericsson, Nokia, & Siemens The trade union movement might be difficult to get out and scram increasingly complex because of the pursuit of 3 vendors to provide the network management. * in that location might be resistance from the alive employees to get transferred to vendor companies because of the cultural barriers that may arise. * There is a chance of maturation rivalries among the 3 vendors if the margins and competition starts getting stiff. * Wastage of installed capacity. * It will increase their dependance on vendors. by and by a lay everywhere of time they may move on the back stern in negotiation meetings with vendors. No previous deals of such outsourcing has happen ed and hence risk is risque Advantages of end to end IT management Outsourcing deal with IBM * Airtel can now concentrate on their core business activities of marketing and sales. * tax tax sharing agreement thus in that location was big incentive for IBM to make the outsourcing deal a success. Reduced opportunism by the vendor. * Solved the scalability issue. * Avoid major increases in capital expenditures in IT. * Gain rile to IBMs rich talent pool, IBMs expertise in IT. They can work together 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 g all overnance, 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 m all innovative solutions, whence Airtel wont be having any o ption to go with a new vendor. There was a fright that the applications not supported by IBM may become obsolete * Revenue sharing was a new model which Airtel and IBM were trying for payments. As both of them didnt pee-pee any experience in it, there was a considerable risk because of the unforeseen uncertainties. 2) How would you body structure the agreements to address your concerns and capture any advantages you have identified? Structure of Agreement with IBM * There should be some provision of unyielding and minimum costs for the revenue tract in the agreement. IT applications not supported by IBM should be available to ensure they go intot get obsolete. * The terms and conditions in the contract should be flexible seemly to cover the changing environment kinetics over the period of 10 years. * furthermore not all the details of the fusion can be written in the agreement. So a joint government body should be formed to manage the arrangement and resolve the issues. * Agreed rhythmic pattern to appreciate the quality of IT services provided by IBM. Structure of Agreement with Ericsson, Nokia, & Siemens Network and Operations focusing should be transitioned to the vendors in a phased and planned dash under constant observation. * To tackle the concern of cultural barriers while working for the vendors, the Airtel employees should be absorbed 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 properly describe and explained to prevent development of unnecessary tensions and edematous competition among them. The vendors should be continuously monitor the networks and provide rapid response once the issue has been identified by them. * To be fair with the vendors if the network capacity prevail unused for a major period of time, some part of payment should be done to them or it can be redeployed at other sectors. What measurements, rewards and penalties, and other governance mechanisms would you design for these two different agreements? With IBM * strategic Alignment Measurements Process surgery inflection % of orders not delivered within the promised date, % of inaccurate and neither 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 Quality Metrics shoot the breeze drop rate in the elevation hours, discover drop rate over a cellular round of drinks, Average tailor Resolve time, amount of time (measured in milliseconds) interpreted by data to get going from one location to another crossways 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 clamor drops. * Customer Experience and comfort Measurements -Network Availability, Call Accessibility measu re eg. how legion(predicate) customers fail to make a call in the first attempt , Call Retainability, voice quality etc. * Management of Resources Utilization of resources, Amount of time taken to meet request or demand, electrical condenser of the resource etc. Reward and sagacity for the employees who are able to solve the issues in minimum time. * Risk assessment earnest over the network etc.