Essay on Strategic Outsourcing At Bharti Airtel Limited
The main problem Bharti Airtel Limited facing is "How to manage its capital expenditures for its operations and how to face the expected exponential growth and a competitive environment." The challenges that the company is facing are
1. Keeping pace with expansion:
Bharti’s customer base is growing at 100% per year. It has its mobile operations currently in 15 circles out of 25 in the country and its fixed line operations in 6 circles. So it is a huge challenge to keep pace with the expansion.
2. Capital expenditures and the risk:
They are facing a severe capital expenditure problem. They couldn’t run new software on the equipment they purchased 2 years ago and it is no longer useful. They require a …show more content…
By analyzing the above problems, the position statement on the main problem they are facing is derived.
(b). Decision Essay: The decision that they are facing is whether to go for outsourcing or not. The decision I recommend is that they should outsource their telecom network equipment and IT equipment management to their vendors.
The arguments that support the decision are
Telecom network equipment management outsourcing: The Industry practice is to purchase about 30% to 40% excess capacity in order to keep one step ahead of customer demand and to compensate for the estimate error of models. For Bharti, this would actually represent $300 million to $400 million. Financial requirements were not Bharti’s only concern; there is also the delay, which the firm could ill afford given its rapid growth, between the time that the need for additional capacity is identified and the time that the additional capacity could be up and running. The process of planning, tendering, financing, purchasing and installing would take anywhere from six months to a year.
IT equipment management outsourcing: Bharti has contracts with IBM, Sun