IBM Bharti Deal
1. Do you think Bharti should enter the outsourcing agreements outlined by Gupta? What do you see as advantages and disadvantages of such agreements? I believe Bharti should enter the outsourcing agreements outlined by Gupta. This kind of Joint-go-to-Market initiative would have Bharti Airtel provide the telecommunications infrastructure and lead sales engagements, IBM provide the IT infrastructure and technology management services and Ericsson/Nokia/Siemens (or a combination of them) provide network capacity.
Advantages:
a) A revenue sharing deal always leads a vendor to put their best foot forward, because increased revenue for the client leads to increased revenue for themselves.
b) Outsourcing to good vendors with global presence leads to Bharti getting access to the world’s best/cutting-edge telecommunications technology.
c) Transferring a large number of staff members (1,000 in this case) to vendor payrolls normally happens when a large part of a business is outsourced. This should be looked upon as an advantage as it reduces:
I. Payroll problems (Bharti Airtel does not have to worry about additional employee benefits, provident fund etc.).
II. Training – Having the same people on-board working as vendors reduces training needs (lesser new hires).
d) Vendors (especially the ones who have not been part of a huge outsourcing deal), once signed on would be extremely enthusiastic to make this deal work well. This would increase their credibility in the Indian market, as well as generate work from other fast growing telecom companies.
Disadvantages:
a) Losing day to day operational control of business processes. Outsourcing operational jobs could lead to an inexperienced vendor handling it.
b) There may be a chance that the creative/new - software and hardware applications not supported by new vendors would not be made available to the Marketing and IT departments. Thus decreasing productivity and morale.
Advantages:
a) A revenue sharing deal always leads a vendor to put their best foot forward, because increased revenue for the client leads to increased revenue for themselves.
b) Outsourcing to good vendors with global presence leads to Bharti getting access to the world’s best/cutting-edge telecommunications technology.
c) Transferring a large number of staff members (1,000 in this case) to vendor payrolls normally happens when a large part of a business is outsourced. This should be looked upon as an advantage as it reduces:
I. Payroll problems (Bharti Airtel does not have to worry about additional employee benefits, provident fund etc.).
II. Training – Having the same people on-board working as vendors reduces training needs (lesser new hires).
d) Vendors (especially the ones who have not been part of a huge outsourcing deal), once signed on would be extremely enthusiastic to make this deal work well. This would increase their credibility in the Indian market, as well as generate work from other fast growing telecom companies.
Disadvantages:
a) Losing day to day operational control of business processes. Outsourcing operational jobs could lead to an inexperienced vendor handling it.
b) There may be a chance that the creative/new - software and hardware applications not supported by new vendors would not be made available to the Marketing and IT departments. Thus decreasing productivity and morale.