Bharti Airtel Outsourcing

* Bharti Airtel aimed to be a let loose cost provider in the highly cracking intensive telecom industry. They necessitate to keep pace with the rapid growth of their customer base, which was growing at almost 100 percent per year. Their st judgegy was to acquire sweet customers and strike low cost per minute, but it required huge working capital investments. * They outsourced every last(predicate)thing and concent governd completely on market, sales and distribution. They redefined the shopping centre activities in telecom industry and concentrated all(a) their resources in acquiring and retaining customers. There were two separate to the Outsourcing deal amongst Bharti and telecom v lastors. First was figure up, maintenance, and servicing of the telecom profits to equipment vendors Nokia, due south and Ericson. so in that respect was the deal with IBM to provide all in all IT solutions. 1) Advantages of Outsourcing their Network dole outment to Ericsson, Nokia, & S iemens * charge pace with network expansion due to immediate installations. * Freed the management of time consuming budgeting, tendering, financing, purchasing and install process.They could immediately focus on core competencies of the company. * qualify from short-term agreements with equipment vendors to long term commitments to get break up bargains and service. * Bharti will pay for network capacity (erlangs) only when it up and running. No need to pay for wild capacity. This solved the problem of conflict of interest between Bharti and the network suppliers. * Increased flexibility, no need to postulate huge capital investments will en satisfactory transferring of the seek to the network supplier. No Production be( no capital investments, no labor cost), cut Transaction costs as no need for new tenders every six months( trim search & contract costs, reduced enforcement costs because of implementation of relational system, lower edition costs because of pay for u se model) * They were able to achieve Predictable Cost Model, no unplanned expenditures. use up the savings in capital expenditure in focusing on new customer acquisition, build new services etc. Disadvantages of deal with Ericsson, Nokia, & Siemens The project might be difficult to manage and rifle 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 may arise. * There is a chance of ontogeny rivalries among the 3 vendors if the margins and competition starts getting stiff. * Wastage of installed capacity. * It will adjoin their dependence on vendors. After a close of time they may move on the dressing foot in negotiation meetings with vendors. No preliminary deals of such outsourcing has happened and hence risk is high Advantages of end to end IT management Outsourcing deal with IBM * Airtel bas e now concentrate on their core business activities of marketing and sales. * Revenue sharing agreement thus on that point 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. * growth access to IBMs rich talent pool, IBMs expertise in IT. They canful work unneurotic 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 overnance, lower translation costs because of revenue enhancement sharing model). Disadvantages of deal with IBM * high-spirited dependence on IBM and if they are not able to provide many innovative solutions, then Airtel wint be having any option to go with a new vendor. There was a vex that the applications not supported by IB M may become obsolete * Revenue sharing was a new model which Airtel and IBM were trying for payments. As both of them didnt have any experience in it, there was a considerable risk because of the unforeseen uncertainties. 2) How would you social structure the agreements to address your concerns and capture any advantages you have identify? social system of Agreement with IBM * There should be near provision of fixed and minimal 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 limit of 10 years. * furthermore not all the details of the betternership can be written in the agreement. So a joint governing body should be organise to manage the arrangement and resolve the issues. * Agreed inflection to valuate the quality of IT services provided by IBM. Structure of Agree ment with Ericsson, Nokia, & Siemens Network and Operations counsel should be transitioned to the vendors in a phased and planned mode 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. * raise recruitment of new employees should be the responsibility of vendor. * The expectations and duties of all the 3 vendors should be properly outlined and explained to proscribe development of unnecessary tensions and unhealthy competition among them. The vendors should be continuously monitoring the networks and provide rapid reply once the issue has been identified by them. * To be fair with the vendors if the network capacity remain wise 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 coalescency mensurations Process Performance rhythmic pattern % of orders not delivered deep down the promised date, % of inaccurate and incomplete 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 Call drop rate in the peak hours, Call drop rate over a cellular roach, Average appear Resolve time, amount of time (measured in milliseconds) taken by data to travel from one pickle 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 peal drops. * client Experience and Satisfaction Measurements -Network Availability, Call Accessibility measure eg. how many customers fail to make a call in the first attempt , Call Retainability, instance quality etc. * Management of Resources Utilization of resources, meat of time taken to meet request or demand, Capacity of the resource etc. Reward and clasp for the employees who are able to solve the issues in minimum time. * Risk assessment Security over the network etc.