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Telecoms operators should review outsourcing strategies

globaltelconews-admin by globaltelconews-admin
15 February, 2006
in English
0


    Outsourcing has become an important weapon in a telecoms operator’s strategic arsenal,

says the report’s author Simon Sherrington.


    An effective and well-managed outsourcing scheme can deliver flexibility, reduce time to market for new services, and help to deliver profit growth for shareholders.

Although failed outsourcing contracts received a great deal of media attention, the author points out that there are now numerous examples of operators that have improved time to market for new services, and/or improved organisational flexibility as a result of handing over management of different activities to third parties.

There is also evidence that outsourcing can help operators to achieve significant cost savings.


    This is not an appropriate strategy for every operator in the telecoms market, but pioneers have proven that the outsourcing model can be made to work,

adds Simon Sherrington.


    Operators should really consider the competitive benefits of outsourcing activities traditionally considered as core.

According to the report, an operator’s market positioning, its strategy, internal expertise and current efficiency should all be considered before it decides to outsource. These factors influence the risks and benefits of handing over the management of an activity to a third party. The new report reviews the competitive importance of various operational activities for fixed and mobile operators, and analyses the potential benefits and strategic risks involved in outsourcing them, to identify a list of activities that operators should investigate with a view to outsourcing.

According to Sherrington,


    At the very least, the process of reviewing whether an activity should be outsourced throws a spotlight on areas for improvement and brings in new ideas.

The Western European market for outsourcing technology and customer services by telecoms operators is expected to show 6% annual growth between 2005 and 2010, rising from EUR5.9 billion to EUR8.0 billion.

Outsourcing of end-to-end network operation and management will be one of the fastest-growing segments, showing a CAGR of 14%.


    We expect to see a number of operators outsourcing end-to-end network and IT management, particularly those that don’t have sufficient scale to match the service investments or the operational efficiencies of larger peers,

says Sherrington. Outsourcing of IT services, billing, OSS and content/application platform management are also expected to show robust growth. Outsourcing by telecoms operators: strategic and commercial options takes an in-depth look at outsourcing of technology management and customer-services activities by telecoms operators. It reviews the types of outsourcing arrangement that have become common and the benefits that outsourcing has delivered. It provides a framework to help operators review whether they should be outsourcing more, and to decide what they should be outsourcing. It also identifies leading suppliers of outsourcing services and provides market forecasts to show where the biggest sources of outsourcing revenue are expected to be found.

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