Outsourcing no longer references an operational method businesses use to cut costs. Instead, in its modern avatar, outsourcing is a way for businesses to drive innovation within their organizations.
Service providers choosing to outsource telecom requirements are in a unique position to provide additional assistance to their customers in the form of product innovation, risk mitigation, and cloud-related services.
While managing human resources is often considered one of the major benefits of outsourcing, there are many other opportunities telecom outsourcing can offer communication service providers (CSPs). These include, but are not limited to:
- The financial efficiency of employing a third party to oversee the implementation and management of certain projects
- Access to a broader range of tools, products, and services
- Increased availability to focus on other projects and areas of the business (including marketing and business development)
- Offering specialized services in a certain area or industry (e.g. IT)
What's Driving Change in the Telecom Industry?
As demand for data bandwidth soars, the average revenue per user drops and telecom providers face ever-tightening margins. Western Europe and the Middle East saw a revenue decrease of 6% and 4% respectively between 2006 and 2016, according to research from Price Waterhouse Cooper (PWC), while the revenue decrease in America was closer to 1%.
These recent telecom market trends prove the need for increased cost efficiency. But that doesn’t necessarily mean that partnering with the cheapest service provider is the best solution. Now more than ever, services providers need to forge new partnerships with organizations that provide a definite, tangible 'value add' for customers.
Operators also need to consider the new dynamics of the industry. Telecom providers aren’t only competing with other telecom providers; they are competing with digital content firms, Internet service providers, and cable companies. The boundaries between these sectors are blurring with businesses moving into the traditional telecom space. Along with rapidly advancing technology, they are forcing telecom providers to innovate, iterate, and deliver to retain or gain market share.
Service providers need a smooth, economical business model that is agile and resilient to change. It needs to be able to withstand significant changes to operating patterns affected by customer demand and service restructures.
Why Innovation in Telecom Outsourcing Matters
For telecom companies to stay ahead of the curve, they need to first analyze their standing in the market in comparison to their competitors. They then need to identify exactly which areas require development, and where additional opportunities may arise. From there, businesses can begin a program of refocusing on core activities and running down anything on the periphery.
Outsourcing is fundamental to this process. Commodity services can be bought from vendors who specialize in anything not covered in-house. New capabilities can be integrated into value chains to augment offerings. By outsourcing supplementary solutions, organizations can focus on their main service offerings.
CafeX, for example, a provider of enterprise software to improve customer experience, engaged Humanify to supply its cloud-based, highly personalized technology. This allowed CafeX to provide tailored solutions to customers of a range of brands, using analytics to match a customer to the right expert. By outsourcing this challenge to a third party, CafeX can offer its customers additional services.
Confluence of Technology
The technological infrastructure supporting cloud-based solutions and as-a-service models has changed beyond recognition over the past 15 years. You can make informed business decisions using real-time data and analytics from these highly integrated IT platforms.
Service providers must reconsider the way they outsource to effectively take advantage of emerging technologies. Carriers can hand over the management of end-to-end processes and networks to a third party. This allows organizations to focus on areas such as strategy and marketing, as well as share risks and set appropriate service level agreements.
Building the Right Relationships
Research from the University of Alicante shows that a closer relationship with your outsourcing partner will lead to greater benefits and higher satisfaction. Therefore, when it comes to choosing your outsourcing partner, it's important the contract outlines exactly what you're getting out of the arrangement. If the output isn't defined accurately, it can be hard to measure the real value of the relationship.
In 2014, global telecommunications provider Bharti Airtel partnered with IBM to scale its services and leverage the IT giant’s expertise. IBM would oversee the management of Bharti Airtel’s IT infrastructure and application services. This partnership allowed Bharti Airtel to focus on other areas of the business while staying invested in building a reliable infrastructure.
Mobile phone company, Reliance Communications (RCom), also awarded a $1 billion contract to Ericsson, back in 2013. The contract allowed Ericsson to manage the day-to-day wireless and wireline network operations in India. RCom chose to outsource telecom responsibilities in an effort to enable the company to meet the evolving customer demands in the telecommunications industry.
The benefits of telecom outsourcing are numerous. From taking advantage of different time zones to quickly scaling up a team of experts to meet business demands, outsourcing offers a variety of solutions to organizations looking to grow. The old model of outsourcing to cut company costs has been replaced by a new, progressive way of working. When used to augment rather than replace your team, outsourcing is a key strategic tool.
Contact Cyient today to find out how outsourcing can benefit your organization.