1. BHARTI AIRTEL’S OUTSOURCING CASE STUDY
When pushed to the wall due to competitive pressures from the CDMA players in 2003, Bharti Airtel decided
to focus on cost reduction as well as prepare itself for explosive growth. More than the cost reduction, Bharti
wanted to ensure that it builds a world class network and still able to focus on the core, i.e. the customers.
WHAT WERE THE REASONS FOR OUTSOURCING OF NETWORKBY
BHARTI?
Bharti realized pretty early that network is not the core for the company and needs to focus on customers by
providing them a reliable, affordable and best in class service experience. Bharti was in no position to manage
the network better then Ericsson or Nokia or Siemens, It was facing competitive pressures from CDMA
players (Reliance and Tata)
They embarked on the outsourcing journey with the following objectives in mind:
1. Focus on the core and outsource the context
2. Faster time to market as well as build scalable networks
3. Enhanced customer experience through better quality of service
4. Get the best people/company across the globe to manage network
WHAT HAS ENSURED THE SUCCESS OF NETWORKOUTSOURCING
FOR BHARTI?
Bharti decided to outsource the management, design, development and deployment of network including
capacity and coverage to players like Nokia Siemens and Ericsson. The ownership of the assets rested with
Bharti while the management and maintenance of the equipment became the responsibility of the service
providers
To ensure the success of network outsourcing, Bhartiprepared a detailed business case detailing its cost
structure and the expected cost structure post outsourcing. It also prepared the detailed performance indices
and incorporated them in the service level agreements (SLAs). The most important aspect of the contract was
clear definition of the roles and responsibilities of Bharti and the service provider. To ensure the success of
network outsourcing, Bharti prepared a detailed business case detailing its cost structure and the expected cost
structure post outsourcing. It also prepared the detailed performance indices and incorporated them in the
service level agreements (SLAs). The most important aspect of the contract was clear definition of the roles
and responsibilities of Bharti and the service provider.
BHARTI’S PROPOSED DEAL
Airtel had proposed outlines of a two-pronged outsourcing structure with its vendors. Airtel’s strategy
included handing over responsibility for the buildup, maintenance, and servicing of the telecom network
to equipment vendors. Airtel was talking with Nokia, Siemens, and Ericsson as potential partners. In
addition, Airtel was planning to outsource the buildup, maintenance, and servicing of its core IT

2. infrastructure to IBM. Other vendors besides IBM had been considered, but discussions had gone the
farthest with IBM since few IT vendors had experience handling all of the aspects of the proposed deal.
Excerpts from each proposal
 Ericsson, Nokia, and Siemens: The vendor will provide Bharti with network capacity—erlangs—in
accordance with Bharti’s Projected erlang requirements in each of the circles in which Bharti operates
and for which they are responsible according to this agreement. In exchange, Bharti agrees to pay the
vendor a fee according to the amount of erlang capacity installed. The actualpayment for network
capacity will be made only when the capacity is up and running and has been used by Bharti
customers, thereby excluding payment for unused capacity at any point in time.
 IBM: IBM will provide Bharti with complete and comprehensive end-to-end management service for
supplying, installing, and managing all of its hardware and software requirements as concerns the
basic IT architecture of the company and all of the applications needed to operate it. The outsourcing
includes everything from the computer on the desktop all the way up to the mainframe, but excludes
all telecom network-specific structures and networks
Key lessons from Bharti’s case study
1. Do not outsource a few tasks in the network operations but outsourced the entire process.
2. Do not base outsourcing decision on only the cost considerations but also on the larger value proposition
of being able to provide subscribers a world class experience.
3. Do not focus on only outsourcing the current process and doing the “same thing for less” but also look
for opportunities to consolidate and transform the entire function. In case of Bharti, the service providers
were able to provide greater value as they eliminated the manual work and implemented best practices
that they followed across the world.