Outsourcing: Is it a Viable Option?
By: Veda Informatics
The economics of international business is forcing telecoms to opt for new methods to reduce cost and ameliorate efficiency. Increasing market competition also pressures them to innovate in terms of products and services. As a result, telecoms are finding it hard to develop and manage such enormous infrastructures. Outsourcing telecom services seems to be the best alternative to opt for as it will enable them to meet the growing market demand.
Outsourcing Telecom Service: Emerging Trends
“Outsourcing telecom service has become an important weapon in a telecom operator’s strategic arsenal,” says the Simon Sherrington, research author with Analysis, an international research firm.
Another survey by IDC, a highly reputed international research firm, supports this fact. The survey reveals that the overall situation of outsourcing telecom service will lead vertical engagements spanning other industries. The study predicts a compound annual growth of 10.7 percent by 2010 in the field of outsourcing telecom service.
What led Companies to Opt for Outsourcing Telecom?
Experts are always divided on whether outsourcing telecom service should be a part of the business or not. A risky factor is that the service provider can always draw undesired benefits from the business operations.
Risk also looms large in terms of privacy of critical business data or clientele information. Not every external agency would adhere to business objectives and policies that the source company supports.
By outsourcing telecom service, a company puts its entire gamut of business operations and the consumer’s trust at stake. In undermining these risks, the telecoms seek to establish a balanced relationship with the outsourcing firms. They recognize that outsourcing telecom service is an integral part of successful business operational strategies.
Jason Spaulding, Research Analyst at IDC, stated that competitive forces are inspiring telecoms to avoid clumsy business operations, particularly customer care. Rather than make a mess of customer care, outsourcing telecom service can take care of it for you.
Yankee Group, an international research firm, also concluded that telecoms are in dire need to strip their operating costs and move towards innovative business strategies like outsourcing telecom service. Telecoms have to transform their business culture pertaining to the international market and competitive environment. This statement was made by Phil Fersht, Research Vice President of Yankee’s Multi-Discipline BPO practice.
Undoubtedly, the global telecom industry is highly competitive and the consumer behavior is highly fragile. Investors, stakeholders and customers have piled pressure on telecoms to perform better. They want telecoms to stay ahead in managing and delivering high quality, innovative business solutions.
They ensure close scrutiny on target dates such as:
- Proposed network deployment date
- Target date for operations to go live
- Uptime and service
- Sales targets
The years 2007 and 2008 witnessed a slight but significant shift in the approach of the telecom companies. Their focus is more towards business development and devising marketing strategies. Companies also tended to focus on cutting down the cost of ownership and fostering efficiency by weeding out undesired or underutilized jobs
It may be noted that sales-oriented business strategies force telecoms to give preference to outsourcing telecom service providers than enhance their in-house capabilities.
As the telecom market is on the verge of a major shift towards next-generation networks, they are finding it tough to hire proficient engineers. The down side to the hiring process is that it takes quite bit of time and does not necessarily guarantee good output.
Therefore, companies turn towards outsourcing telecom services as a more viable option to transfer the risk to an external agency.
Outsourcing Telecom Service: Range of Services Available
A 2005 study, conducted by IDC, tapped the growth of BPO firms in the telecom sector. Earlier, the telecoms resorted to outsourcing telecom service involving customer care, billing and other back-office functions to BPOs.
However, now, they are also outsourcing telecom business processes such as IT infrastructure and networking solutions to external agencies. With this obvious shift to virtualization technology, the big telecom firms resort to established IT brands for handling and managing their IT needs. Outsourcing telecom business software is another aspect of this trend.
Essential Checklist to Choose an External Service Provider
The 2005 telecom survey conducted by IDC highlights the growth of BPOs for the telecom sector. The study reveals that BPO companies that provide services to mid-size or small-size telecoms are gradually emerging on the scene. In terms of outsourcing telecom service, the big brands were hesitant to venture into outsourcing telecom services.
The emergence of several external service providers has made it more difficult for telecoms to decide which BPO to select. For telecoms,’ their first concern is to ensure professionalism and data secrecy when choosing outsourcing telecom service.
The following checklist is also useful in deciding a BPO:
- Look for an experienced service provider. Also, ask for credentials from earlier business clients. Make sure they’ve dealt with outsourcing telecom services before
- Test their knowledge skills in terms of their business requirements and technology advancements.
- Check whether the prospective service provider is able to carry out the entire process without utilizing additional organizational resources. Do they have sufficient infrastructure to support the outsourced business process? Finalize an efficient BPO that requires minimum efforts from the source firm.
- Decide whether the prospective business partner fits in the operational work flow process. This becomes particularly important for telecoms with international operations. The service provider should integrate into the business process at both domestic and international level.
- Devise a mechanism to assess the service provider’s performance. Negotiate the business deal based on the amount paid to the service provider. Ideally, you should strike a deal that is proportionate to the quality of services offered.
Citing the negative side of outsourcing telecom services, Neil MacDonald, Gartner vice president and research director, stated the following important points:
- Telecoms should identify their core competencies otherwise outsourcing is futile.
- The international market calls for innovation and quality services but it is up to the telecoms to assess how they match this demand.
The growing popularity of outsourcing telecom service should not create a perception that it is a means to ensure cost cutting or to transfer business responsibilities to an external agency. Its importance lies in the fact that it adds a higher degree of expertise and brings dynamism to the business operations. The business partnership is meant to help telecoms achieve their operational objectives and subsequently, contribute towards their greater market share.
