Strategic Outsourcing at Bharti Airtel Limited
1539 words 7 pages(a). Problem Essay:
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 reliable, …show more content…
The other option available for Bharti is to continue on its own and deal with the situation of expanding customer base. But this may be possible for some time and after crossing certain limits, it may become difficult for the company to operate and may lead to decrease in the expansion or the growth. One more option is outsourcing of only one of the IT equipment management or telecom equipment management. This may result in the problem of good coordination. So they should go for outsourcing of the both equipment management.
There can be some disadvantages of the proposed decision like: 1. Both the buyer (the firm) and the seller (the outsourcing contractor) entail some risks with respect to price, quality, time or other key terms of the contract. 2. The risk of the excessive dependence upon the vendors may be there because the company may loose any other better opportunities that they may come across in future. 3. Since the vendors are bigger and international companies, the cultural differences may arise. 4. Since hardware and software applications are provided by different vendors, getting into agreement with one only vendor may lead to no longer have access to certain creative new applications. 5. Because there is no priority of any such deal, it will be difficult to arrive on feasible cost of deal and revenue sharing model.
These can be mitigated or reduced by