Bharti Airtel is considering strategic outsourcing to help manage its rapid growth. It plans to outsource network management and operations to reduce capital expenditures and transfer investment risks. Outsourcing could lower costs through reduced hiring needs and better bargaining power. However, outsourcing core business functions increases dependency on vendors and limits flexibility. Vendors also face risks from unused capacity and uncertainty in Bharti's growth. With proper oversight, outsourcing could help Bharti address the huge investments needed to serve its growing customer base.

1. STRATEGIC OUTSOURCING @ BHARTI AIRTEL SECTION B - GROUP 9 PIRAMANAYAGAM M. 12/262 BADRINATH GM 12/260 SAURABH KUMAR 12/261 MURALIKRISHNA BATCHALA 12/248 RICHIE GIFTSON PAUL J 12/265

2. Time line - Bharti Airtel

3. Operations and services

4. Future Plan of Airtel Indian Telcom market growth rate – 17% pa In 2003, 1.5 mn additions of mobile user / month By 2007, Bharti is expected to have GSM service in 5161 towns For that, Required growth of 100 news towns per month Need to hire 2000 to 3000 people

5. What they require ?

6. Core Competency Operational Excellence Entire network management and intricacies related to call management Involves efficient management of network instruments Their bread and butter Good service to customers Helps in providing lower cost to customers

7. Proposed Outsourcing deal

8. Proposed Outsourcing deal

9. Governing Mechanism Trust the vendors but verify them Process Monitor them continuously Updating with latest R&D inputs Defined conflict resolution mechanism Defined reasons for contract termination

10. Advantages Uncertainties in capital expenditures kept low Transferring equipment investment risk to vendor Pay for use and avoid excess capacity wastage Lower Human resources cost due to their transfer to vendor companies High bargaining power for Bharti, due to high competition between service providers

11. Problems of Outsourcing More the outsourcing core business – more the dependency on vendors Limitation of Bharti to use creative new application – IBM deal would limit them to their applications Inertia from existing employees to transfers Transfer of network assets built by Bharti

12. Vendor Concerns Unused capacity will earn nothing, but necessary for operations Inability to increase prices to cover the increased risk Absorbing Bharthi employees Uncertainty in growth of Bharti

13. Why Outsourcing Bharthi should go for outsourcing Huge capital expenditure needed to help growing customer base Rapidly changing trends in telecom industry leads to quicker obsolescence of equipments Keep the IT applications that are used to tackle competition in-house Risk diversified by involving three vendors instead on one Proper governing mechanism should be in place

14. Thank You