Insight: When Outsourcing Comes In

Outsourcing in telecoms used to be a controversial option, but is now a key operational strategy. Keith Gurden of Hutchison Team Telecom looks at how this has happened – and how to choose the right outsourcing partner

To outsource, or not to outsource – that is the question many telcos and operators are asking themselves. It’s still sometimes seen as a controversial option in any business sector, and doubly so in telecoms, especially when it comes to outsourcing core capabilities such as network building and maintenance. After all, isn’t building and managing networks what telecoms companies are supposed to do?

However, a number of factors have combined to put telecoms outsourcing firmly in the spotlight. First, there’s increased scrutiny and pressure from shareholders, investors and customers to perform. It’s all about targets – target dates for network deployment, target dates for go-live, targets for uptime and service levels. And that’s across all types of network and service, from fibre to cellular, to WiMax and radio.

Leaner times

Second, there’s the increasing business focus on sales, marketing and customer service, with attempts to boost efficiency by stripping out extraneous parts of the business and focusing on revenue-generating activities. This drive towards leaner operations, combined with job cuts, has changed the telecoms supply chain, with far fewer resources available in-house for services and support.

Third, there’s the telecoms skills gap to overcome. In the early part of this decade, the comms engineers that were building ISP infrastructure simply moved on to other sectors because suddenly, their services were no longer in demand. As a result, a chunk of the telecoms engineering skills base has migrated to other business sectors – just as the telecoms market is entering a major growth phase with next-generation networks.

These three factors have made outsourcing a high priority for key telecoms players, if they are to deliver on their commitments to building, deploying and maintaining next-generation networks.

There are added attractions too: as well as plugging the skills gaps and supplying vital engineering staff on the ground, outsourcing can also deliver cost savings in areas such as procurement, logistics and maintenance, by taking these costs outside of the telecoms company.

Outsourcing checklist

However, when outsourcing you still need to choose the right partners – one that delivers value at all points in the relationship, not just manpower to help in a tight squeeze.

So how do telecoms companies go about choosing the right outsourcing partner? Here’s a checklist of the right questions to ask the prospective partner, to help you make the right decision.

Experience counts

Outsourcing success relies on people as much as technology, and whereas technology is relatively reliable and predictable, people are not. An important factor to bear in mind is that the individuals who set up the telecoms deals are different from those who then run the actual services.

Entrepreneurial minds are responsible for the first six to 18 months, designing and building the network infrastructure, identifying benefits and fine tuning operations. But following roll-out, a new team will be brought in to manage the outsourced service, and there is a risk that they may lack the experience and skills that lay behind the original success of the project.

So it’s essential to ask the prospective partner for their customer credentials, which is the best evidence of their engineering services and understanding of technologies. Look for long experience and blue-chip customer references: if they’ve succeeded on other high-profile networks, there’s an excellent chance they will succeed for you.

Evaluating the true cost of in-house telecoms

Whilst opting for in-house telecoms maintenance may, on the surface, save you the cost of outsourcing to a third party, make sure you do the maths and work out the true cost of both approaches.

If you go down the in-house route, you’ll have to factor in staffing and equipment costs, as well and the ongoing time and cost overheads associated with continuous training for your engineers. Add in the necessary accreditations to guarantee your staff care up to speed on the latest skills, and you may well find that the economics add up in favour of outsourcing.

Project matters

It may seem obvious stuff, but can the partner manage every phase and aspect of the infrastructure project, from consultation and planning right through to building and maintenance of the network? It’s worth checking that they can substantiate their claims when it comes to the scope and scale of their engineering expertise and industry experience.

If the partner has the project management experience you require, then outsourcing becomes even more cost-effective, as you’ll be able to work together to get the best use of existing resources.

The proactive approach

Not all outsourcing partners are equal. Whilst some may provide a perfectly acceptable reactive service and be able to demonstrate and back up their credentials, isn’t your business worth a bit more than “reactive”?

Opt for a partner who will look to actively improve your business, and you’ll add real value to the partnership and ultimately get better service.

Links in the supply chain

Can the prospective partner also work with equipment vendors in logistics, inventory supply, integration and commissioning equipment? If so, this can help solve a procurement headache – especially for companies that operate internationally, which may need the same outsourced services for large-scale, multi-country networks.

Dealing with multiple vendors can be a hugely demanding task, but by ensuring your outsourcing partner has the right strategic vendor relationships, you’ll be able to take advantage of a single point of ownership, and reduce the burden on your organisation’s time and resources.

Target partners

The contract between the telecoms company and the partner will contain multiple SLAs. To help both parties get satisfaction from this, proper lines of communication should be established to ensure that both parties are working towards the same targets and goals.

A precise brief that defines the aims and technical aspects of the installation is key to matching and fulfilling expectations. Irrespective of what services you outsource to a partner, the relationship is based on trust – and trust starts with defined targets and goals.

And when it comes to maintaining the fundamentals of your business proposition – your network infrastructure – trust is a must-have. You need to know that your choice of outsourcing partner and the agreement you have in place will offer you the equipment, the engineering skills and the right response, so that you can deliver on your business commitments.

The final calculation

In conclusion, outsourcing shouldn’t just be seen as a way to reduce costs, or to plug personnel gaps – it can replace expertise that has drained away from the telecoms sector, and put dynamism back into the business. It’s a partnership that should help telecoms companies achieve their strategic and operational goals. Now that’s a target worth hitting.