Yasser Al Mimar - Etisalat and IT Outsourcing

3,861 views

Published on

As industries become competitive, firms and organizations have been using their core competencies to gain competitive advantage. Outsourcing has become one of the strategies adopted by businesses to manage their Information systems. In the same time using blue ocean strategy to create uncontested market space and make the competition irrelevant is considered a magic framework for company's growth and success.

Published in: Business, News & Politics
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
3,861
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
64
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Yasser Al Mimar - Etisalat and IT Outsourcing

  1. 1. Strategic Management Etisalat & IT Outsourcing Strategy The Research has been done by Yasser Al Mimar
  2. 2. TABLE OF CONTENTS Introduction ............................................................................................................................... 2 Literature Review ...................................................................................................................... 3 Overview of outsourcing ........................................................................................................ 3 Definition of outsourcing and IT Outsourcing ....................................................................... 3 Overview of IT Outsourcing ................................................................................................... 4 History and Evolution of IT Outsourcing ................................................................................ 4 Relevance of Outsourcing to today’s Business Challenges.................................................... 6 CASE STUDY ............................................................................................................................... 8 Etisalat Overview ....................................................................................................................... 9 Etisalat and UAE Telecoms Market ............................................................................................ 9 Competition forces change of strategy in Etisalat ..................................................................... 9 Etisalat & IT Outsourcing Strategy ........................................................................................... 10 Exhibit1 .................................................................................................................................... 15 References ............................................................................................................................... 16 1
  3. 3. Introduction As industries becomecompetitive, firms and organizations have been using their core competencies to gain competitive advantage. Outsourcing has become one of the strategies adopted by businesses to manage their Information systems (Gonzalez, Gasco&Llopis, 2006). In the same time using blue ocean strategy to create uncontested market space and make the competition irrelevant is considered a magic framework for company's growth and success To begin with, changing business climate found many firms looking for alternative ways to provide improved quality in their products, improved service to their customers, reduce time and cost to achieve company’s goals and get profit and reputation. Furthermore, the global trade has opened the competition doors for companies, and placed these companies under unprecedented competitive pressure. Businesses thus must understand how to maintain their competitive advantage, remain competitive in a volatile consumer market and overcome the critical problem of global competition. Outsourcing IT functions was one of the tools that used forsurviving in the market competition,and has become a popular source of competitive advantage. As a result of both strategies, a major trend in evidence is the outsourcing of various organizational functions, and accelerated technological advances have substantially improved industrial productivity. So in the domain of information systems and technology, outsourcing has become a viable strategic alternative to acquire and managing costly as well as complex information technology (hereafter called IT) (Grover, Cheon&Teng, 1994). And in the domain of products and services, Blue Ocean has become a starting point for a company to win in the future. (W. Chan Kim & Renée Mauborgne 2005) and works parallel with the outsourcing strategy The researchers have agreed that Information technology adoption offers a means of saving costs and increasing administrative efficiency. Krass (1990) indicated that outsourcing IT services can save 10-50% in IT expenditure. Based on that many companies nowadays have started to cut staffs, costs, and increasing efficiency by paying other companies and transferring some of an organization's recurring internal activities to outside providers (Maurice F , 1999) in order to run IT and other support divisionsto remain competitive such as, telecommunications companies. Those companies now are realizing the importance of developing their outsourcing capabilities and enter into arrangements with vendors to handle support processes (e.g., logistics, distribution, warehousing and information technology). 2
  4. 4. ETISALT - Emirates Telecommunications Corporation as example of these companies which isbased in UAE as telecommunications services provider, operating in 18 countries across Asia, the Middle East and Africa. Outsourcing tool is one strategy that Etisalat is adopting to reduce costs and maintain customer service quality. In truth, firms have outsourced since the industrial revolution, and Information Systems/Information Technology (IT/IS) outsourcing has become a basic strategy and has experienced considerable growth all over the world over the last several decades (King, 2008; Beasley et al., 2009) and this growth is expected to be continued and maintained in the near future (Gonzalez et al. 2006c; Beasley et al., 2009) – WHY? Because is considered an effective way to create competitive advantages by lowering costs, increasing productivity, and allowing the organization to focus on its core activities (Davis et al. 2006; King 2007; Can et al., 2009). Literature Review Overview of outsourcing According to Ciborra (1993), companies are following different supply chain management strategies to fulfill the customer requirements and improve company's profits due to increasing competition and up down business environment. Therefore, a competitive enterprise must satisfy their customers need by improving service speed, flexibility and response capability within the changing environment (Wee, et al, 2010). Adopting one of the value disciplines of competitive advantagewhich is outsourcing will make the organization differentiation from competitors;in 1776 Adam Smith formulated a theory of competitive advantage, describing the notion of outsourcing as a way of reducing costs by hiring cheaper labor in less developed countries. In the contrast, &according to Wee, et al (2010), outsourcing reduces capital, labour and liability exposure.So as a common factor,we deduce that successful implementation of an outsourcing strategy has been credited with helping to cut cost (Gupta and Zeheuder 1994; Greer, Youngblood and Gray 1999). Definition of outsourcing and IT Outsourcing Outsourcing isa concept of moving production and information systems out of the firm by contracting with competent providers, it is sourcing of a service (or product) from outside the host organization. One of the main outsourcing tools and considered as traditional outsourced services of expertise throughout the 20th centuryis Information technology (IT) outsourcing. IT outsourcing is a process by which transfer of property or decision rights in varying degrees over the IT infrastructure takes place from the user organization to an external 3
  5. 5. organization (Barthelemy& Geyer, 2004). A few other studies have defined outsourcing as an act of subcontracting a part or all of a firm’s IT function to one or more external vendors (Loh&Venkatraman, 1992; Sengupta&Zviran, 1997). For the purpose of this research I would add the definition used by Smith (2005): outsourcing is transferring a good or service by either contracting out or selling an organization’s IT assets to a third party supplier. The supplier may be a systems consulting firm, contractor, or hardware & software vendor. Overview of IT Outsourcing Information Technology is considered as non-core functions of outsourcing, the idea of outsourcing is also applied for the procurement of IT services. Studies have shown that organizations have been outsourcing IT functions since the early 1960s (Due, 1992; Lacity, 1992). From data processing in the 60s, modern day IT outsourcing has made significant strides with a variety of business processes being outsourced. The use of outsourcing is becoming more sophisticated and nowadays more organizations are outsourcing business processes. As companies grow in size and operations, they outsource some of their business processes to focus on their core competences to remain competitive. Therefore, it becomes increasingly clear that their focus has to be redirected to their core activities while the non-core functions can be 'clouding' or 'outsourced' to suppliers or third party specialized in that particular function. Information Technology – Information System IT/ISone of such areas commonly outsourced in most of organizations. Grover and Teng (1993) examined the positive influence of IT/IS outsourcing on an organization's core, competitiveness, capability, employees, economics, cost and technology to evaluate the potential advantages gained by organizations. History and Evolution of IT Outsourcing Outsourcing is a phenomenon that as a practice originated in the 1950s, but it was not until the 1980s when the strategy became widely adopted in organizations (Hatonen& Eriksson, 2008).For IT outsourcing aspect as said earlier, organizations or companies have been using IT outsourcing since the early 1960s (Due, 1992; Lacity, 1992). In 1963, Perot’s electronic data systems (EDS) were performing data processing services for Frito-Lay and Blue Cross (Mason, 1990). In the early 1970s software programming was first moved offshore as software production was easily moveable, since it seldom needed to be committed to a physical medium (Dossani& Kenney, 2004). 4
  6. 6. Furthermore, Kodak’s initial decision to outsource the bulk of their IT functions in October 1989, by giving the bulk of data center operations to IBM that was originally scheduled to run for a 10-year span (Lacity&Willcocks, 2000; Dibbern, et al., 2004; Patton, 2005). System integration was another popular outsourcing segment in the 1990s and involved highly complex technology, including network management and telecommunication, so IT outsourcing has long played an important role in the outsourcing framework. Broadly speaking, the interest in IT outsourcing resurfaced in the early 1990s, not for contract programming or data processing services, but for network and telecommunication management, distributed systems integration, application development, and system operations From above series IT Outsourcing history, we deducethat outsourcing is a wellestablished practice, and outsourcing is not just an option it is now a pivotal part of any successful company.In the same time, we should know that outsourcing is not simply limited to private vendors.Services can be outsourced to other public entities as well. So outsourcing is no longer restricted to small and medium-sized firms that do not possess their own IT infrastructure, but large corporations also resort to outsourcing (Mahmood, Hall &Swanberg, 2001). Outsourcing was not formally identified as a business strategy until 1989 (Mullin, 1996). In the 1990s, as organizations started to focus more on cost-saving measures due to global economy slowed, these organizations started to outsource most of those functions necessary to run a company, and they realized that outsourcing has become more results- and value-driven, and less about simple cost-cutting, this in turn, has led to demand for outsourcing functions and continues evolving and mature in outsourcing market. Each action should face reaction, economic downturns made a spark for seeking plans to reduce IT costs and also shake up traditional IT outsourcing delivery models. The period between 2001 and 2003, for example, increased the adoption of offshoring, that is, the export of IT work to places such as India or china, where labor is significantly 5
  7. 7. cheaper than in developed markets, such as the United States and Europe. (Adam Smith, 1776 ) IT can be thought of as a transport system, carrying and transferring digital data just as the electricity grid carries energy.So the emphasis has moved from contracting out IT hardware and IT services towards studied based forms of outsourcing, to cover missing internal capabilities and skills, to realize possible benefits of new IT, and to gain access to knowledge and innovation of “best of breed” suppliers (DiRomualdo and Gurbaxani 1998, pp. 68-71; Quinn 1999, p. 9; Quinn.2000, pp. 13-14). In traditional outsourcing, a supplier owns and operates the infrastructure, applications, and people required to deliver services to a customer organization. Changing structure of IT outsourcing market and the continuously developing business models have had a major impact on the type of outsourcing relationships. Focusing and mechanism has shifted towards closer interaction between outsourcer and provider as organizations engage in network partnerships with multiple suppliers, each of which is best-in-level for the respective outsourced function and where one vendor often takes on the role as the coordinating prime contractor (DiRomualdo and Gurbaxani 1998, pp. 70, 71; Kakabadse and Kakabadse 2000, p. 677; Lacity and Willcocks 2001, p. 3).These new types of partnerships are considered an investment which connecting two partiesoutsourcer and provider together in tie relation and determine a fit which makes it more beneficial to stay with the partner than to continuously having to establish new connections (Mohr and Spekman 1994, p. 135).So these real partnerships are not just a mixture between those two extremes, but are characterized by closer, more intimate bonds (Mohr and Spekman 1994, p. 140). Relevance of Outsourcing to today’s Business Challenges According to the authors and researchers, IT outsourcing cut costs by as much as 10 per cent to 50 per cent (Lacity&Hirschheim, 1993). In the contrast, cost reduction is not the only key reason behind all IT outsourcing decisions. The driving forces for IT outsourcing is the need to focus on core activities and technical consideration, in addition to cost reduction (Costa, 2001). Therefore, organizations or companies concentrate on their core activities and exploit competencies based on their experience and knowledge, contracting out activities in which they are less competent (Beaumont & Costa, 2002).So all these factors such as, lower costs, improved productivity, best service, higher quality, higher customer satisfaction and ability to focus on core areas are some of the benefits of outsourcing. In the other hand, it is important to not only focus on achieving these objectives, but also 6
  8. 8. evaluate the possibilities of running a successful business while outsourcing such as, Cloud Computing as outsourcing tool to reducing the carbon footprint from company domestic corporate. However, outsourced environments are complex and highly integrated with organizations and operations. As complexity increasesmanaging relationships with service providers becomechallengingand risks which are associated with outsourcing or even IT outsourcing. For instance whenever, there is an outsourcing decision, there is an inherent risk connected with it. In addition, in any outsourcing contract, there are some hidden costs, unexpected outcomes, and decline in service levels, to name a few (King &Malhotra, 2000). IT Outsourcing as tool also has a challenge and has its downside. When functions are shipped elsewhere, the organizations will face risks from several areas. I would list some of these challenges that could affect negatively on organizationscharacteristics as follows: Firstly, security, privacy and confidentiality. Security can be a major issue. (Barthelemy and Geyer, 2004) maintained that outsourcing vendors’ reputations are not the best with information systems professionals. A company can better control access to information and protect equipment when it is on site (McDougall). Offshore assets and information in the server or possession of another company are much harder to protect, such as, customers background details, profiles and others. Therefore, customers’ information needs to be protected and, almost as importantly, feel protected (Thibodeau).  Secondly, the quality of personnel and work cannot always be guaranteed. Companies or organizations could face low quality or huge delays in work because they are at the mercy of the outsourcer. The contracting company does not interview and hire personnel, the outsourcer does. So If outsourcer hires poor skills workers just to fill seats, then quality is sure to suffer (Ross and Westerman)  Thirdly, High turnover at offshore providers is also another issue. Retention rates are very low overseas. The means large losses of efficiency as personnel are continually retrained (Overby).  Fourthly, Lack of flexibility, entering a long term contract with IT computer vendor may prove to be disadvantage when changing business or technological circumstances or even restructuring the firm which bring a need to migrate to alternative solution or process.  Lastly, Impact the local jobsand competence of IT functions Innovation and even. Outsourcing will reduce the organization’s capability for creative organizational development. Thus, it might face a reduced competence to innovate through 7
  9. 9. synergetic interactions (Susan Cramm, 2010). Besides, from its distance position the vendor could have a limited potential or experience to acknowledge and develop some specific needs of the outsourcer, this in turn, will let competitors rapidly replicate offer same service or any advance upon any such innovations (Mata et al., 1995). From other perspective, researchers have seen that without the ability to outsource, organizations could lose competitiveness. Outsourcing (IT) allows companies to rapidly add talented people and more capacity. A firm needs good process discipline to outsource effectively. As noted there were hundreds companies enter into outsourcing agreements without that. This can lead to escalating costs, poor results, and difficulties managing the relationship (Murphy, 2004). Having the right partnership includes a good process discipline is clearly a competitive advantage for Telecommunicationsor Bankservices providers in emerging markets like UAE. No corporation needs to be convinced that in today’s scale-driven, technologyintensive global economy, partnerships are the supply chain’s lifeblood. (Jeffrey K. Liker and Thomas Y. Choi, 2004). In United Arab Emirates, national organizations such as the National Bank of Abu Dhabi (NBAD) and Emirates Telecommunications Corporation, ETISALT, continue to outsource work to outsourcing vendors and do partnerships with outside companies – this in turn, has led to enhance the overall performance of the corporation and obtaining goods and services from outside suppliers Case Study In mobile telecommunications there are many signs of competition at the service provider level and we only have to walk down the street to confirm the statusby checking retail shops or agents and discover that. Discounts, deals and different other inducements are widespread and varied in Telecom market place. In the contrast, telecom service providers are facing difficult challenges such as subscriber loyalty, lunch new service and increase in competition from pure Internet-based operators. So thesecontradictions and the scale of competitionhas forcedthetelecom corporations to sketch out a plan about how to coordinate diverse production skills and integrate multiple streams technology to build up its core competency by doing what they do best and letting other likevendors or suppliers, do the other stuff. Outsourcing as strategy was an important decision that has taken by Emirates Telecommunications Corporation, ETISALT in IT outsourcing aspect. The company carry out a very good framework to decide what needs to be outsourced and how. 8
  10. 10. Etisalat Overview Etisalat is considered one of the largest telecommunications companies leading operator in the Middle East and Africa, founded in 1976 &headquartered in UAE. The company operates in 18 countries across Asia, Middle East and Africa, servicing over 100m customers out of a total population of approximately 1.9bn people. The company offers fixed line voice, data services, ISPs, content providers and mobile operators. Etisalat and UAE Telecoms Market In UAE's telecoms market, competition has begun to chip away at Etisalat's revenues. The picture became clearer whenEtisalat's share of the local mobile market declined to 58 % in 2009 compared with 2007, 2008 respectively with flat subscriber reduced around 10-15% customers in the third quarter of 2009. By comparison, other mobile operation such as du in UAE has added 159,800 new customers to its mobile business in the last quarter, and now has about 37 % of the market. By 2008–2009, the UAE market had grown highly competitive. Mobile rates were as low as 8-10 Fils per minute and ARPU— monthly average revenue per customer unit—had fallen by 30% in three years as two telecom providers fought to capture new subscribers (Etisalat and du) Competition Forces Change of Strategy in Etisalat In 2006new operator du entered the market and start offering mobile services across the UAE and internet packages in certain cities in UAE. The sector witnessed the first impact of liberalization in terms of strong subscriber base growth (43%) during 2008.du has steadily gained on Etisalat, getting an increasing number of mobile subscribers in 2008, 2009. 9
  11. 11. Through the business downturn, financial crisis and competition market, Etisalat has compelled to reduce costs while maintaining customer service levels that they are offering in order to maintain profit levels and be ready to prosper once downturn is over. Etisalat has suffered from a high rate of customers who are left the operator due to several reasons; for instance, the company has noticed that there is decline in net additions as competition from du starts to impact revenue, ARPU decreasing from AED 177m in 2007 to AED 171m in 2008, to AED 162m in 2009 and AED Dh118min 2010. The company has also found there is a lack of wireless telecommunication network compared with alternative infrastructure (such as fiber)and innovative mobile data serviceto rollout all UAE areas. Another issue Etisalat faced is lack of technical and logistic support (as effective and timely responses) from company customer services through Etisalat social media space on Twitter and Facebook during the year 2009 – 2010 to respond and reply on customers concerns, complaints and queries. Based on what mentioned above, in 2008 Etisalat has started to build up new strategy to branch out from traditional telecoms services, and has planned to offer a host of additional IT/IS solutions and needs the support of sector specialists to outsource these solutions. So the transformation has seen in the Etisalat telecom operator through: Transformation 1 Streamline their processes 2 Improve their sourcing strategies 3 Consider new business partnerships Adopting Change consumer perceptions and internal service process and culture in the face of stiff, service orientated competition in a new de-regulated market. (Announced a battery of groundbreaking initiatives with the launch of EDGE - Enhancing the Development and Growth of ETISALAT) Etisalat picks Tech Mahindra for $ 400 mn 10 yrand Sony Ericson as IT outsourcing vendor Etisalat & Cisco – Singed MOU PartnershipTo Provide Managed IT Technical Service Etisalat &IT Outsourcing Strategy Etisalat has worked deeply to increase and improvecapacity and improve mobile service quality by creating comprehensive plan to adopt a new business model which is based on outsourcing itsIT support services. In order to meet these challenges and threats, Etisalat started focus increasingly to its value-chain partnersfor assistance, both by outsourcing logistics efforts to third-party providers and by partnering with its valued suppliers, therefore searching for and choosing outsourcing partner becomes one of the first stages.Etisalat believes that select partners that complement its services will enable them to provide a total solution. It found 10
  12. 12. that may it has specialized in one or more value chain activities and outsource the rest. And its opportunity for the company to increase business advantage based on the insights and innovations generated by external partners. Table below gives a clear picture about outsourcing strategy that Etisalat followed and value-chain formto achieve its objectives. Year 2008 2009 2010 IT Outsourcing Strategy Implemented Started outsourcing its IT business support services to the most specialized vendors who have global expertise to carry out IT tasks effectively, such as IBM and Cisco. Established partnerships with Fujitsu, Cisco and Juniper to get support in internet leased lines and provide customer equipment like routers and LAN switches. European Computer Telecoms Group (ECT) and its indirect sales partner Ericsson, has implemented successful ring back tone solution for Etisalat as outsourcing service. ECT´s solution provides WEB, WAP, SMS and IVR interfaces in English and the local languages Planned to enhance productivity and improve efficiency in line with renewed economic growth in the UAE, In term of IT outsourcing tool, they signed MOU agreement with HCL Technologies, a leading global IT services provider to offering innovative ICT (information and communication technologies) services to customers and joint solutions around mobility that can drive efficiencies within enterprises Outsourced its directory device operation and Mobile/Internet Technical Support through Etisalat International’s Egypt Facility to save cost and maintain customer service quality Etisalat has selected Alcatel-Lucent (service providers – Voice, Data and Video) to accelerate deployment of its nationwide fiber-optic network in UAE Partnership with TIGO Provider, a joint project was started in deploying a national backbone, crossborder and metropolitan network to be co-run and co-shared. Cost-savings were made by optimizing the network, outsourcing maintenance work in telecom. 11 Reason Aiming at focus on key areas of functioning and competencies,namely enhance the quality of customer care, increasing productivity and reduce operating costs Reluctant to realize functions individually Lack of expert knowledge and possibility of employing specialists in the enterprise (Etisalat) Good opinion about IT service provider (reputation) Reducing costs of functioning of an enterprise(Etisalat) Improvement in quality of realizing function Transferring responsibility to outsourcer and Access to expert and specialized knowledge
  13. 13. ‘Figure 2’ As a differentiation strategy in the part of IT outsourcing level,Etisalat has found it useful to focus more narrowly on certain value chain activities and rely on outsiders to perform the remaining value chain activities. Theystructured and managed IT category (Figure2) correctly by developing its infrastructure design through outsourcing framework to improve the overall performance of its networks and build technological strategy that supports the service delivery process to customers to overcome the drawbacks and any issues that could impact the service. So Etisalat believes that IT business process outsourcing isn’t only about applying old tactics to new parts of the business; it’s about new ways of capturing value, for instance; Etisalat Issues High competition Lack of wireless telecommunication network Outsourced Solutions In 2010 Etisalat have used its infrastructure services integrated with private utility companies’ services provider and Dubai Government to implement great job of setting up various electronic ways to pay bills. Electronic payments can be done online for services like traffic & parking fines, mParking for parking fees, water and electricity bills. Build up rapidly reliably and inexpensively a wireless telecommunication network overcoming the lack of alternative infrastructure. Thus, Etisalat singed agreement with INTRACOM TELECOM’s extensive experience in wireless backhauling and access (outsourcing Global Vendor), enables Etisalat to effectively backhaul 2G/3G/4G traffic and provide its business customers broadband wireless services to cover most UAE locations 12
  14. 14. Lack of technical and logistic support (Etisalat social media) Differentiation (Blue Ocean) High end services Impact local IT Jobs in Etisalat In 2011 Etisalat has outsourced its customer service social media platform to SocialEyez, the Social Media practice of News Group International to monitor Etisalatrelated discussions generated in the UAE, provide detailed analysis reports on user perceptions, satisfaction, expectations, and complaints, and assist Etisalat in its social media engagement activities Outsourced service to make deals with most UAE banks to do online payment facilities. This interoperable platform will accelerate financial inclusion by allowing customers and subscribers of multiple service providers to use existing channels to access their accounts. It will provide the ability to carry out transactions from one Bank or online payment platform to a beneficiary on another bank or account payment platform. It was a spark for Mobile Service consumers to participate through Etisalat Moving up the value chain, Etisalat has partnered with Ogle Middle East, to roll out the Ogle application to its 100 million+ mobile subscribers across the Middle East and Africa. This is the first deployment from Aurasma – the world’s leading Augmented Reality platform. Augmented Reality or “AR” is an innovative technology that transforms images and objects including brochures, tickets or any form of printed media into actual videos or 3D animations Etisalat has prepared a plan to shift some of IT staff members to work in new centers within the Corporation, or transfer them into private companies who have been selected to provide certain services for Etisalat. Those staff will do their duties together with the employees of the private sector to ensure continuity of work, while enhancing their experience from a world-renowned international vendor Etisalat performance after adopting the outsourcing tool during 2010, 2011 of operations has been very impressive in the hold cost down while growing revenue and customer satisfaction significantly. Selective global outsourcing allows Etisalat to structure its project teams by utilizing both in-house and outsourced staff. Table (figure3) below shows the forecast performance how it is impacted by the competition and how Etisalat has kept its positional map in the market place and still comfortably in the lead. 13
  15. 15. ‘Figure 3’ Etisalat project mobile internet revenues also grow rapidly in 2008 and 2009 from AED 2.04bn in 2007 to AED 3.70bn in 2008, AED 4.50bn in 2009 and to AED 5.83bn in 2012.Via IT outsourcing, Etisalat has raised its performance and had 7 million domestic mobile subscribers as of Sept. 30, up 11 percent from a year ago. Besides that, Etisalat has sufficient financial leverage and excellent revenue (FY 09-10) “Exhibit 1” this in turn, has led to  Engage in price wars with its competitors in UAE because it translates into lower prices for service products for consumers;  Through a great way to differentiate is to collaborate with leading IT outsourcing company in Asia, such as leading software- hardware providers,for instance, Etisalat has signed partnership with China-based Huawei would enable it to cover 85 per cent of the UAE's populated areas under the advanced 4G LTE-FDD (fourth generation long-term evolution frequency-division duplexing) network, Launched the new LTE mobile Wifi device allowing customers the opportunity to enjoy the most reliable wireless internet access at all times;  Collaborate with expertise leading clouding company, Etisalat reach a conviction that cloud computing can delivers multiple efficiencies and economies of scale, which contribute to the reduction of energy consumption per unit of work, create a Green IT environment and enhance Etisalat reputation in the market to adopt green marketing approach;  Play an ever greater role in the process of Mergers and Acquisitions. For instance, Etisalat is looking at potential mergers, acquisitions, and divestitures to gain competitive advantage by studying opportunities for M&A with Reliance, India’s second-biggest cellular phone operator and Mobile Services. 14
  16. 16. According what we have pointed out, consolidated EBITDA has grown to 4,221m AEDafter 2009 representing a year-over-year growth of 9%. EBITDA growth was mainly due to more effective cost management outsourcingthat led to lower network cost and direct cost of sales. EBITDA increased year-over-year by 4% to 3,291m AED leading to EBITDA margin of 60% in comparison to 56% of the same period of 2011. As the information in figure 3,I believe Telecom competition in the UAE is focused on price and network quality, and I would strongly say Etisalat as one of the telecom operators that succeeded in having a clear focused expansion strategy when the company decided to use outsourcing strategy. A strategy backed up by solid networks infrastructure, diversified vendors, products and services portfolio along with the unique customer interface and has positive impact in company value chain and operation, thus has a positive reflection on the company's revenue in last two years. “Exhibit 1” Note: EBITDA - Earnings before interest, taxes, depreciation and amortization 15
  17. 17. References 1. Beaumont, N. & Costa, C. 2002. ‘Information technology outsourcing in Australia’, Information Resources Management Journal, 15(3): 14-31 2. Barthelemy, J. & Geyer, D. 2004. ‘An empirical investigation of IT outsourcing versus quasioutsourcing in France and Germany’, Journal of Information and Management, 42:533-542. 3. BI-ME staff, Feb 2012, "Etisalat adopts new business outsourcing model for support services" BusninesIntelegence [online] avliable at http://www.bi-me.com/main.php?id=56823&t=1 4. Blue Ocean Strategy, W. Chan Kim & Renée Mauborgne 2005, 2005 Development, Vol. 19, No. 8, 2000, pp. 670-728 5. Busbin, J. W., Johnson, J. T. &DeConinck, J. (2008) ‘The Evolution of Sustainable Competitive Advantage: From Value Chain to Modular Outsource Networking’ Competition Forum. 6(1) pp. 103-­­108 6. Costa, C. 2001. ‘Information technology outsourcing in Australia: A literature review’, Information Management & Computer Security, 9(5): 213-224. 7. DiRomualdo, Anthony/Gurbaxani, Vijay (1998): Strategic Intent for IT Outsourcing. In: Sloan Management Review, Vol. 39, No. 4, 1998, pp. 67-80. 8. Dibbern, J., Goles, T., Hirschheim, R. &Jayatilaka, B. 2004. Information systems outsourcing: a survey and analysis of the literature. ACM SIGMIS Database [Online], Volume 35 , Issue 4 Fall 2004 Available: http://portal.acm.org/citation.cfm?id=1035236&jmp=cit&coll=GUIDE&dl=GUIDE&CFID=736 04731&CFTOKEN=68974091#CIT 9. Does Outsourcing Destroy IT Innovation?, by Susan Cramm | 11:00 AM July 28, 2010 10. Dossani R. and Kenney M., 2004, Offshoring: Determinants of the Location and Value of Services, Asia- Pacific Research Center, Stanford University 11. Etisalat assist regional telecom operators to overcome the business downturn, 2009, International Outsourcing form [online] available at http://www.tioforum.com/newsletters/1206-09/etisalat.html 12. Due, R.T. 1992. ‘The real costs of outsourcing,’ Information Systems Management, 9(1): 78-81. 13. European Computer Telecoms 2008 "Etisalat Launches Ring Back Tone Service with Record Growth" PDF [online] available at http://www.ectringback.com/downloads/12102007_ECT%20launches%20RBT%20with%20record%20growth_e _final.pdf 14. Germany’, Journal of Information and Management, 42:533-542 15. Gonzales, R., Gasco, J. &Llopis, J. 2006. ‘Information systems outsourcing: A literature analysis’, Journal of Information and Management, 43:821:834 16. Global Investment House June, 2009 “Emirates Telecommunications Corporation- Etisalat” PDF [online] available at http://up.m-e-c.biz/up/Mohcine/Report/ETISALAT_25062009.pdf 17. Government of Dubai, Dubai Electricity & Water Authority [online] available at http://www.dewa.gov.ae/consumers/consguide/billpayment.aspx 18. Greaver, Maurice, II (1999). Strategic Outsourcing A Structured Approach to outsourcing Decision and Initiative. New York NY: AMA Publications 16
  18. 18. 19. Greer, C.R., S.A. Youngblood, and D.A. Gary. 1999. Human resource management outsourcing: The make or buy decision. Academy of Management Executive 13(3):85-96 20. Grover and Teng (1993) "the decision to outsource information systems funtions" Journal pf Systems managment 44(11). pp. 34-38 21. Grover, V., Cheon, M.J., &Teng, J. T. 1994. ‘A descriptive study on the outsourcing of information systems functions’, Information & Management: 27: 33, 44 22. Gupta, M. and D. Zheuder. 1994. Outsourcing and its impact on operations strategy. Production and Inventory Management Journal 35(3):70-76 23. Hatonen, J. & Eriksson, T. (2008) ‘In Global Sourcing and Value Creation: Opportunities and Challenges’ Journal of International Management. 15(2) pp.142-­­155 24. INFRASTRUCTURAL DEVELOPMENT - TELECOMMUNICATIONS (n.d) “Etisalat-Huawei partnership to cover 4G network”*online+ available at http://www.uaeinteract.com/korean/news/default.asp?ID=30 25. Jeffrey K. Liker and Thomas Y. Choi, December 2004 " Building Deep Supplier Relationships" [online] available at http://hbr.org/2004/12/building-deep-supplier-relationships/ar/1 26. John Cross, May 1995, "IT Outsourcing: British Petroleum’s Competitive Approach" The magazine [Online] available at http://hbr.org/1995/05/it-outsourcing-british-petroleumscompetitive-approach/ar/1 - John Cross 27. Kakabadse, Nada/ Kakabadse, Andrew (2000): Critical review – outsourcing: A paradigm shift. In: The Journal of Management Development, Vol. 19, No. 8, 2000, pp. 670-728 28. King, W. R., &Malhotra, Y. (2000). Developing a framework for analyzing IS sourcing. Information & Management, 37, 323-334 29. Krass, P (1990) the dollars and sense off outsourcing inforamtion Week 259 Feb 26, pp 26-31 adopter’, Journal of General Management, 19(1): 17-31 30. Lacity, Mary C./Willcocks, Leslie P. (2001): Global Information Technology Outsourcing: In Search of Business Advantage. 31. Lacity, MC &Willcocks, LP 2000, 'Survey of IT outsourcing experiences in UK and US Organisations', Journal of Global Information Management, vol. Apr-Jun 2000 32. Lacity, M.C. 1992. ‘An interpretive investigation of the information outsourcing phenomenon’. Unpublished doctoral dissertation, University of Houston, Houston, TX 33. Lacity, M.C. &Hirschheim, R. 1993. ‘Implementing information systems outsourcing: Key issues and experiences of an early Adopter, Journal of General Management Vol 19, No1 pp17-31 34. Lacity, M.C. &Willcocks, L.P. 1998. ‘An empirical investigation of information technology sourcing practices: lessons from experience’, MIS Quarterly, 22(3): 363-408 35. Lacity, Mary C./Willcocks, Leslie P. (2001): Global Information Technology Outsourcing: In Search of Business Advantage. Chichester et al.: John Wiley & Sons, 2001. 36. Loh, L. &Venkatraman, N. 1992. Diffusion of information technology outsourcing influence sources and the Kodak effect. Information Systems Research, 334-358 37. LR Mobile News Feed, 2012 -"Etisalat Offers Augmented Reality in MEA" lightreading [online] available athttp://www.lightreading.com/document.asp?doc_id=227443&f_src=lightreading_section_99 17
  19. 19. 38. Mahmood, M.A., Hall, L. &Swanberg, D.L. 2001. ‘Factors affecting information technology usage: A meta-analysis of the empirical literature’, Journal of Organizational Computing and Electronic Commerce, 11(2):107–130. 39. Mary C. Lacity, Leslie P. Willcocks, and David F. Feeny, May 1995 "IT Outsourcing: Maximize Flexibility and Control", The Magazine HBR Blog [online] available at http://hbr.org/1995/05/itoutsourcing-maximize-flexibility-and-control/ar/1 40. Mata, F. J., Fuerst, W. L. and Barney, J. B. (1995) Information technology and sustained competitive advantage: A resourcebased analysis. MIS Quarterly 19(4), 487–505 41. McDougall, P. Northwestern Mutual Looks to Protect Customer Data Outsourced to India. www.informationweek.com, Accessed: April 4, 2005 42. McFarlan, F.W. & Nolan, R.L. 1995, ‘How to manage an IT outsourcing alliance’, Sloan Management Review, 36: 9-22 43. Mohr, Jakki/Spekman, Robert (1994): Characteristics of partnership success: Partnership attributes, communication behaviour, and conflict resolution techniques. In: Strategic Management Journal, Vol. 15, No. 2, 1994, pp. 135-152. 44. Murphy, C. (2004) ‘Evolving Views on Outsourcing’ Information Week. Spring, p. 51-­­52. 45. Overby, S. “The Hidden Costs of Offshore Outsourcing,” CIO, pp. 60-66, September 1, 2003 46. Quinn, Brian (2000): Outsourcing Innovation: The New Engine of Growth. In: Sloan Management Review, Vol. 41, No. 4, 2000, pp. 13-28 47. Risks, Benefits, and Challenges in Global IT Outsourcing: Perspectives and Practices SubhankarDhar, San Jose State University, USA BinduBalakrishnan, San Jose State University, USA - IDEA GROUP PUBLISHING 2006 48. Rodney R. Yates SmithSelective Global Information Technology Outsourcinghttp://student.bus.olemiss.edu/files/conlon/others/others/OffShoring/SELECTIVE% 20GLOBAL%20INFORMATION%20TECHNOLOGY%20OUTSOURCING.pdf 49. Ross, J. W., and Westerman, G. Architecting New Outsourcing Solutions: The Promise of Utility Computing. October 2003 50. Ryan Harrison, March 24, 2008 "Etisalat gears up to capture a slice of UAE outsourcing" emiartes24/7 [online] available at http://www.emirates247.com/eb247/news/etisalat-gears-upto-capture-a-slice-of-uae-outsourcing-2008-03-24-1.218556 51. Smith, A. ([1776] 1994) The Wealth of Nations. New York: Random House Modern Library Edition [online] available at http://db.lib.uidaho.edu/ereserve/courses/b/business/380_01/smith.pdf 52. State the Problem / Challenge to Be Addressed (n.d) PDF [online] available at http://www.kdpaine.com/tasks/sites/kdp/assets/File/Socialeyez%20SNCR%202012%20entry%2 81%29.pdf 53. Susan Cramm , July 28, 2010 2010 - Does Outsourcing Destroy IT Innovation? HBR Blog Network [online] available in http://blogs.hbr.org/hbr/cramm/2010/07/does-outsourcing-destroy-itin.html 54. Tafti, M. H. (2005), "Risks Factors Associated With Offshore IT Outsourcing," Industrial Management & Data Systems, Vol. 105, No. 5, pp. 549 - 60. 18
  20. 20. 55. Thibodeau, P. India outsourcing firms eye employee screening: Tech workers would be allowed to register for program voluntarily. Computerworld, April 11, 2005 56. Tomas Volek, 2012 “Global Off Shoring and Outsourcing Market Dynamics” *onlone+ available at http://www.softec.sk/files/Softecon/softecon2012/prednasky/4-softecon_2012_volek.pdf 57. Abdulla Hashim, Oct 17, 2012 " Etisalat set to launch cloud services in 5 key markets " [online] available at http://www.pacificcontrols.net/news-media/Etisalat-launch-cloud-services-in-5keymarkets.html 58. Alcatel-Lucent (n.d) "Etisalat selects Alcatel-Lucent to accelerate deployment of its nationwide fibre-optic network in UAE" [online] available athttp://www.itweb.co.za/index.php?option=com_content&view=article&id=29163:etisalatselects-alcatellucent-to-accelerate-deployment-of-its-nationwide-fibreoptic-network-inuae&catid=208:outsourcing&Itemid=176&tmpl=component&print=1 59. UAE Interact, 25/01/2005, ETISALAT unveils new corporate strategy to hone its competitive EDGE [online] avaliable at http://www.uaeinteract.com/docs/ETISALAT_unveils_new_corporate_strategy_to_hone_its_co mpetitive_EDGE/15024.htm 19

×