Thursday, July 22, 2010

Outsourcing Telecom Networks And Managed Services

Outsourcing of Telecom Networks and managed services APPEARS to be a strong trend in the Telecom world.

However, is this really providing valuable benefits to the organization …… or just a perception of benefit?

The main perceived benefits seem to be:

- Increased efficiency

- Access to a broader and deeper knowledge pool

- Clearer visibility of, and more control over, capital and operating expense

- Allows the operator to focus its efforts on serving the customer better rather than the management its technology infrastructure.

Cost is definitely one reason for outsourcing and potentially an increase in quality as someone else has suggested in this discussion. The buyer however needs to take into consideration the total cost of the project and have a contingency element to cover any cost of quality issues that may arise. I have had personal experience of where an new supplier came on board to maintain a network who needed a lot of hand holding by both my employer's company and also another incumbent supplier to bring the new supplier's level of quality up to scratch. On paper the new supplier's offering had been very good.

Another key reason for outsourcing can be the opporunity to reduce the numbers of staff that the network operator has. By outsourcing the network operation the operator can TUPE across staff into the new supplier's business. This potentially reduces the operators exposure to redundancy costs and also enables it to have a more flexible service provision.

KPIs and SLAs can certainly be introduced but they do not ensure quality levels. When putting KPIs together, irrespective of commodity, it would be suggested that there is a risk and reward element rather than using them as a stick to beat the supplier with. If you try to shift all the risk on to the supplier by introducing high penalties then you could well find that the KPIs and SLAs have a negative impact rather than the positive one you were hoping for.

Outsourcing is often seen as the panacea to a company's problems however if you are not prepared to put in the time and effort to manage and build the relationship with the supplier then the company could end up with more problems than ever before.
There are potentially bad outcomes too … often overlooked or ignored in the planning and honeymoon stages. Remember to keep in mind that:

-It takes time for an outsourcing company to learn the inner workings/processes of an operator, so there will be an inevitable teething period in the meantime.

-Depending on the business model of the outsourcing firm, IBMs model was to bring in employees from the Indian operations. And although hardworking/diligent/professional workers there were undeniable language, communication and cultural barriers which most certainly hindered efficiency. Both these cons counteract the perceptions that the outsourced model is more efficient.

- I found that there was a lack of ownership/accountability within an outsourcing company. I hazard to say that this is due to the displacement between the management of the operator and who the technical support staff are reporting to, and there being another layer of management to communicate between.

- Definitely a valid point too often given little attention is this ….. as an employee that is outsourced you don’t have the same feeling of belonging within the organization or job satisfaction, which in turn effects an employee’s motivation and therefore productivity.

The outsourced model has certainly taken hold for network operators, even more so since traditional telecoms services such as Voice/SMS are becoming less and less profitable. But the perceived merits of the outsourced model are yet to be proven in my opinion.

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