Strategic Outsourcing at

Bharti Airtel Limited

Group 7
Gaurav Singh | Gurpreet Singh | Nikhil Kumar| Nikhil kejriwal | Prashant
Gaur | Samarjyoti Das | Sankar S

Case Analysis
Future

Current

Challenges
-- Base
Base Stations
Stations =
= 4000
4000 (04)
(04)
-- Hire
Hire 2000-3000
2000-3000 technical
technical expert
expert
(if
(if not
not outsourced)
outsourced)
-- 1400
1400 towns
towns connected
connected through
through
GSM
GSM
-Incompatible
-Incompatible IT
IT structure
structure
inherited
through
inherited through acquisitions
acquisitions

Obsolescence of networking
hardware at a very fast rate
Lengthy procurement process
Conflict of Interest - with
hardware vendors
Integration of legacy systems
HR Issues attraction and
retention of talent

-- Base
Base Stations
Stations =
= 40000
40000 (07)
(07)
-- Transfer
Transfer 1000
1000 staff
staff members
members (if
(if
outsourced)
outsourced)
-- Provide
Provide GSM
GSM service
service in
in all
all 5261
5261
census
towns
census towns
-Robust
-Robust and
and dynamic
dynamic IT
IT system
system
with
the
ability
to
upscale
with the ability to upscale
according
according to
to environment
environment

Proposal
Hardware Deal

Nokia, Siemens and Ericsson

Vendors as per circles & availability

Software Deal

IBM Sole vendor for all IT needs

Buildup, maintenance and servicing

of telecom network equipment

Buildup, maintenance and servicing

of core IT infrastructure

Payment agreement based on

erlangs used by Bharti excluding
the unused capacity

Everything from computers to

mainframes excluding telecom
network specific networks

Sharing of revenue between Bharti

and IBM

Percentage of revenues share set to

decrease as overall revenue
increases

Five year contract renewable for

another five years

SLAs hotline customer satisfaction

and application implementation
delays

Ownership of assets rests with Bharti

and maintenance responsibility rests
with service providers
Quality parameters also taken care
by SLAs
Three year contract and renewable
under mutual agreement

Proposal Analysis
Bhartis perspective

PROs

Lesser investment upfront and only as per

usage

Capital expenses would be financed by vendors

Freedom to the management to focus on their

core competency

Outsourcing the risk and headache of hardware

CONs

Operations Dept. Concerned about handing

over the day to day operations to vendor, as
they felt BHARTI was more experienced and
hence better positioned to handle this
IT & Marketing Dept. effect on the time-tomarket, support for other applications mostly
legacy systems

HR Dept. transfer of employees

Acceptance by leadership

Lose of control of hardware and network

stability

Partners perspective

PROs

Opportunities for continuous revenue

stream after initial investment

An opening to lucrative deals in the

Indian Telecom sector in future

Solutions can be re-used around the

world

CONs

Additional risk to be borne

Gamble on the upcoming brand in terms

of huge upfront investments

Taking on and managing a huge number

of Bhartis employees

To work with Bharti, vendors would have

to project Bhartis future which is not
their area of expertise

Recommendations
Bharti should go ahead with the proposed outsourcing agreement-

Competitive Advantage :It can use its resources and expertise to its core areas of
product innovation, value-added services, marketing, branding and pricing

Company do not have to keep investing in maintaining excess capacity of 30 -40%

Improvement of overall industry profitability by reducing conflict between network

equipment vendor(like Nokia, Siemens, Ericsson) and telecom company(Bharti) Can
provide world-class mobile services by leveraging Ericsson's expertise

Rapid Growth is possible

Cost reduction for Bharti: Rapidly changing trends in telecom industry leads to quicker
obsolescence of equipment's

Access to new expertise and technologies: It would be able to fully utilize the
external suppliers investments, innovations and specialized professional capabilities to
their advantage.

Quality control: Because of penalty and reward linked to quality, vendors will ensure
quality level which otherwise would be burden of Bharti.

But..

It should have a proper governance mechanism in place so as to keep things is check as

the partners will be playing a huge role and Bharti would become dependent on them for
most activities

Thank You