STRATEGIC OUTSOURCING

@BHARTI AIRTEL

SECTION B - GROUP 9PIRAMANAYAGAM M. 12/262BADRINATH GM 12/260 SAURABH KUMAR 12/261MURALIKRISHNA BATCHALA 12/248RICHIE GIFTSON PAUL J 12/265

Time line - Bharti Airtel

Operations and services

Future Plan of Airtel

Indian Telcom market growth rate – 17% pa

In 2003, 1.5 mn additions of mobile user / month

By 2007, Bharti is expected to have GSM service in 5161 towns

For that, Required growth of 100 news towns per

month Need to hire 2000 to 3000 people

What they require ?

Core Competency

Operational Excellence Entire network management and intricacies

related to call management Involves efficient management of network

instruments Their bread and butter Good service to customers Helps in providing lower cost to customers

Proposed Outsourcing deal

Proposed Outsourcing deal

Governing Mechanism

Trust the vendors but verify them Process

Monitor them continuously Updating with latest R&D inputs Defined conflict resolution mechanism Defined reasons for contract termination

Advantages

Uncertainties in capital expenditures kept low

Transferring equipment investment risk to vendor

Pay for use and avoid excess capacity wastage

Lower Human resources cost due to their transfer to vendor companies

High bargaining power for Bharti, due to high competition between service providers

Problems of Outsourcing

More the outsourcing core business – more the dependency on vendors

Limitation of Bharti to use creative new application – IBM deal would limit them to their applications

Inertia from existing employees to transfers

Transfer of network assets built by Bharti

Vendor Concerns

Unused capacity will earn nothing, but necessary for operations

Inability to increase prices to cover the increased risk

Absorbing Bharthi employees Uncertainty in growth of Bharti

Why Outsourcing

Bharthi should go for outsourcing Huge capital expenditure needed to help

growing customer base Rapidly changing trends in telecom industry

leads to quicker obsolescence of equipments Keep the IT applications that are used to tackle

competition in-house Risk diversified by involving three vendors

instead on one Proper governing mechanism should be in

place

Thank You