Airtel India case
1. What do you see as advantages and disadvantages of entering the outsourcing agreement outlined by Gupta?
Advantages:
1) Pay for use and avoid excess capacity wastage. Company do not have to keep investing in maintaining excess capacity of 30-40%.
2) Lower Human Resources cost due to their transfer to vendor companies. It can use its resources and expertise to its core areas of product innovation, marketing, branding, pricing and value added services.
3) High bargaining power for Bharti, due to high competition between service providers
4) Transferring equipment investment risk to vendor
5) Uncertainties in capital expenditures kept low
Disadvantages:
1) Inertia from existing employees to transfer
2) Transfer of network assets build by Bharti
3) More the outsourcing core business- more dependency on vendors
2. What would be your major concerns? How would you structure the agreements to address your concerns?
1)softwares and hardware not supported by IBM (which ever company gets the contract) will not be supportedapplications 2)transfer of nearly 1000 staff members to vendor companies
3)concerns of being stuck with investments from vendors
4)
3. Assume the role of IBM or Nokia. What major concerns would you have about entering an agreement with Bharti? 1. No revenue from unused capacity
The unused capacity of 30-40% that is vital for operations but will not earn them anything now
2. Increasing equipment price to offset risk will not be possible
If they get into the agreement then they will not be able to increase equipment prices to cover all the increased risks
3. Absorbing Bharti employees
Now they have to absorb hundreds of Bharti’s employees. Some organizations had very less workforce and if they absorb such a high number of employees suddenly it may cause an organizational structural changes.
4. Threat of lockout in future
If they do not sign then it will look like they are
Advantages:
1) Pay for use and avoid excess capacity wastage. Company do not have to keep investing in maintaining excess capacity of 30-40%.
2) Lower Human Resources cost due to their transfer to vendor companies. It can use its resources and expertise to its core areas of product innovation, marketing, branding, pricing and value added services.
3) High bargaining power for Bharti, due to high competition between service providers
4) Transferring equipment investment risk to vendor
5) Uncertainties in capital expenditures kept low
Disadvantages:
1) Inertia from existing employees to transfer
2) Transfer of network assets build by Bharti
3) More the outsourcing core business- more dependency on vendors
2. What would be your major concerns? How would you structure the agreements to address your concerns?
1)softwares and hardware not supported by IBM (which ever company gets the contract) will not be supportedapplications 2)transfer of nearly 1000 staff members to vendor companies
3)concerns of being stuck with investments from vendors
4)
3. Assume the role of IBM or Nokia. What major concerns would you have about entering an agreement with Bharti? 1. No revenue from unused capacity
The unused capacity of 30-40% that is vital for operations but will not earn them anything now
2. Increasing equipment price to offset risk will not be possible
If they get into the agreement then they will not be able to increase equipment prices to cover all the increased risks
3. Absorbing Bharti employees
Now they have to absorb hundreds of Bharti’s employees. Some organizations had very less workforce and if they absorb such a high number of employees suddenly it may cause an organizational structural changes.
4. Threat of lockout in future
If they do not sign then it will look like they are