Strategic Outsourcing: Opportunities and Challenges for Telecom Operators

Strategic Outsourcing: Opportunities and Challenges for Telecom Operators

Varadharajan Sridhar (Management Development Institute, India)
DOI: 10.4018/978-1-60566-148-3.ch001
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Telecom operators have a wide variety of functions to perform including marketing of telecom products and services, managing their networks, providing after-sales customer service, and innovating new products and services in tune with fast changing technologies. Though until recently the telcos have kept their core network management functions in-house, there are recent announcements of large scale outsourcing of network management functions. As operators, especially those providing mobile services, have evolved from offering voice services to advanced data and video services, the Information Technology (IT) services required for appropriate management of these vale added service offerings have also become complex. Some carriers have also outsourced their IT functions to large IT services vendors. In this chapter we deliberate the reasons for strategic outsourcing such as core competency, production economies, and transaction costs as presented in the literature and analyze these in the context of outsourcing model pioneered by an Indian mobile operator. We also explain vulnerabilities and risks associated with these outsourcing contracts and measures to be taken by the firm to mitigate their effects.
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Outsourcing is defined as the process of commissioning part or all of an organization’s assets, people, and/ or activities to one or more external service providers (Lee, 2006). Lee (2006) further points out that since outsourcing can make organization either agile and proactive, or sluggish and reactive, it is just not an operational decision but a strategic one with far-reaching consequences.

Quinn & Hilmer (1994) point out the following two strategic outsourcing approaches used by chief managers of organizations:

  • 1.

    Concentrate the firm’s own resources on a set of “core competencies” where it can achieve definable preeminence and provide unique value for customers.

  • 2.

    Strategically outsource other activities—including many traditionally considered integral to any company—for which the firm has neither a critical strategic need nor special capabilities.

By doing the above, firstly, the firms maximize return on internal resources. Second, well developed core competencies provide formidable barriers against future and present competition. Third, the firms that outsource are able to fully utilize the external supplier’s investments, innovations and specialized professional capabilities to their advantage. Fourth, this joint strategy decreases risk, shorten cycle times, lowers capital and operating expenditures for the firm.

Through out 1990s, large firms in the United States first began outsourcing non-core information technology (IT) services to large companies domestically, preferring to have these services provided securely and reliably from outside, rather that building up in house expertise. Outsourcing work mainly included software application development and maintenance.

Typically the IT services and their associated processes tend to be human intensive and are traditionally outsourced to countries where the labor costs are lower and from where the services could be delivered remotely without sacrificing quality and efficiency (Sridhar & Bharadwaj, 2006). Referred to as offshoring, the organization’s products and services in this case are provisioned from locations in other countries (Davis, et al.,2006). Examples of such offshore outsourcing areas include customized software development, package software implementation, software product testing, customer care support services, IT infrastructure management and back office operations.

US companies expanded off-shoring through partnership, acquisitions and local subsidiaries. Thus they followed a less risky and more strategic approach of alliances by keeping the control with them. Their sourcing strategy more closely resembled the “in-sourcing” strategy of traditional offshore investments for global manufacturing. Sridhar & Bharadwaj (2006) discuss details on the model of growth of IT and IT Enabled Services outsourcing industry.

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Editorial Advisory Board
Table of Contents
Indranil Bose
Chapter 1
Varadharajan Sridhar
Telecom operators have a wide variety of functions to perform including marketing of telecom products and services, managing their networks... Sample PDF
Strategic Outsourcing: Opportunities and Challenges for Telecom Operators
Chapter 2
Sami J. Habib
This article presents a computer-aided integration tool, iCAD, that can predict a network evolution. We have used the term a network evolution to... Sample PDF
Empirical Prediction of Computer-Network Evolution
Chapter 3
Hak Ju Kim
This article seeks to develop a richer understanding of the suitability of IP telephony in the Public Switched Telephony Network (PSTN) with an... Sample PDF
Suitability of IP Telephony in the Public Switched Telephone Network (PSTN): A Case Study
Chapter 4
Abid Al Ajeeli
This chapter describes a detailed framework configuration infrastructure design for a high performance network. The configuration is described based... Sample PDF
A Framework for High-Speed Networking
Chapter 5
Nurul I. Sarkar, Catherine Byrne, Nabeel A.Y. Al-Qirim
Ethernet network technology is still one of the most popular LAN technologies in use today by many organizations and educational institutions... Sample PDF
Updating on Gigabit Ethernet Implementation: The Case of a Large New Zealand Organization
Chapter 6
M. Chandrasekaran, R. S.D. Wahida Banu
This chapter introduces and analyses a class of non-linear congestion control algorithms called polynomial congestion control algorithms. These... Sample PDF
Interaction Between MIMD-Poly & PIPD-Poly Algorithms and other TCP Variants in Multiple Bottleneck TCP Networks
Chapter 7
Xabiel G. Pañeda
This chapter presents a method for performance analysis and configuration of audio/video-on-demand services. These kind of services makes use of an... Sample PDF
A Systematic Approach to the Analysis and Configuration of Audio/Video-on-Demand Services
Chapter 8
Say Ying Lim
As more and more servers appearing in the wireless environment provide accesses to mobile users, more and more demand and expectation is required by... Sample PDF
Mobile Information Processing Involving Multiple Non-Collaborative Sources
Chapter 9
Vilmos Simon
In the next generation IP-based mobile networks, one of the most important QoS parameters are the delay and the delay variation. The cell handover... Sample PDF
Network Planning Algorithms for Optimizing Signalling Load in Mobile Networks
Chapter 10
Joon-Yeoul Oh, John P. Mullen
This chapter proposes a very effective heuristic algorithm to address a variation of the cellular network expansion problem and discusses each... Sample PDF
A Heuristic Solution to the Large Scale Cellular Telecommunication Network Expansion Problem
Chapter 11
Manuel Vilas
This article introduces a distributed system, called wireless proxy, to mitigate the effects of user mobility over streaming services on IEEE 802.11... Sample PDF
Wireless Proxy: Distributed System to Mitigate the Effects of User Mobility Over Streaming Services on IEEE 802.11 Wireless LANs
Chapter 12
R. Radhakrishnan, K. R. Shankarkumar, A. Ebenezer Jeyakumar
In this chapter, we propose a new scheme for Multi User Detection (MUD) using Parallel Interference Cancellation (PIC) technique. This technique... Sample PDF
Soft Decision Parallel Interference Cancellation for Multi-Carrier DS-CDMA
Chapter 13
Ghassan Kbar
This chapter introduces a new radio resource management technique based on distributed dynamic channel assignment, and sharing load among Access... Sample PDF
Distributed Resources Management in Wireless LANs that Support Fault Tolerance
Chapter 14
Mieso K. Denko
This article proposes a cooperative data caching and prefetching scheme for Mobile Ad Hoc Networks (MANETs). In this scheme, multiple hosts... Sample PDF
Cooperative Data Caching and Prefetching in Wireless Ad Hoc Networks
Chapter 15
Essam Natsheh
The challenge in creating a routing protocol for ad-hoc networks is to design a single protocol that can adapt to the wide variety of conditions... Sample PDF
A Survey on Fuzzy Reasoning Applications for Routing Protocols in Wireless Ad-Hoc Networks
Chapter 16
Essam Natsheh
Mobile ad-hoc network is a network without infrastructure, where every node has its own protocols and services for powerful cooperation in the... Sample PDF
Fuzzy Linguistic Knowledge for Active Queue Management in Wireless Ad-Hoc Networks
Chapter 17
Yun Wang, Lee Seidman
The use of network traffic audit data for retrieving anomaly intrusion information and profiling user behavior has been studied previously, but the... Sample PDF
Risk Factors to Retrieve Anomaly Intrusion Information and Profile User Behavior
Chapter 18
Rania Wehbi
In Inter-Vehicle Communication (IVC) networks, the high mobility and lack of infrastructure pose major challenges in designing secure routing... Sample PDF
Network Setup for Secure Routing in Inter-Vehicle Communication Networks
Chapter 19
Antonios Alexiou, Christos Bouras, John Papagiannopoulos, Dimitrios Primpas
This chapter presents the design principles that cover the implementation of broadband infrastructure in the region of Western Greece, by examining... Sample PDF
Metropolitan Broadband Networks: Design and Implementation Aspects, and Business Models
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