OVERVIEW OF THE CASE

 Bharti- Founded by Sunil Mittal in 1995 to take

advantage of the liberalisation of Indian telecom
market
 Major player in Indian Telecom industry
 Largest player in growing wireless segment with a
quarter of the market share
 Fast growing with a revenue increase of 100% over
2003
 Highly competitive market with focus on volumes
against margins
 Exponential growth expected in next 18 months
CHALLENGES FOR BHARTI
I.T. Challenges
 IT network scalability to match the size of the
organisation
 IT design not Bharti’s core competency
 Incompatibility in existing and inherited IT systems
 High obsolesce cost
 To face huge up-front investments for getting right
architecture
CHALLENGES FOR BHARTI
Network Challenges
 Conflict of interest with vendors
 Industry practice to purchase 30% excess capacity to
compensate for estimation error in prediction capacity
 Increased costs of purchasing and installation at more
sites, staff and maintenance

HR issues
 Difficult to retain best and the brightest as talented
guys preferred MNC’s with high reputation
ADVANTAGES
 Fully capitalize on India’s astounding growth surge
 Indian Market for Telecom is growing exponentially
so outsourcing will help them to match this growth
 New network set up in any circle takes around 6
months minimum and Bharti not in a situation to
loose the subscriber base
 No need to pay the vendors before their service so it
will also improve Bharti’s cash flow cycle
 Excess capacity buying is not required which is around
30-40%
ADVANTAGES OF
OUTSOURCING CONTD..
 For IT services they will always get the updates services
thereby saving their wastage of money on obsolete
softwares
 Can fully concentrate on providing service to
customers
 Can avoid the problem of hunting for new resources
(manpower) required as a part of expanding business –
This is currently a problem for HR team
 End to end management service in case of IT
operations
DISADVANTAGES
 Core competency in operations being shifted to
vendors
 It will increase their dependence on vendors. After a
period of time they may move on the back foot in
negotiation meetings with vendors
 It is very tough decision in a country like India to lay
off or transfer 1000 employees
 It is a service providing business and it will add one
more channel level between customers and company
thereby customer satisfaction may get affected
 No previous deals of such outsourcing has happened
and hence risk is high
OUR OPINION
After weighing the pros
and cons we recommend
Bharti to go ahead with its
outsourcing plan
BHARTI’S CORE COMPETENCIES
 Achieved Market dominance in Mobile services
 Provides “error free” customer service with low call
drop rates, broad coverage, cost efficient and
innovative in new products and services
 Provides “end-to-end service” broadband, long
distance, videoconferencing and dedicated data and
voice line services to business customers
 Its growing broadband and Telephone Services
including Wi-Fi, VPN and Video surveillance
 Its deployment of EDGE, a 2.5G GSM-compatible
technology- can upgrade its services to 3G levels
TELECOM AND IT NETWORK OF
BHARTI
IT requirements categories:
 Telecom Network Systems and Software
 Customer Management Information Systems
 Business-support software and hardware architectures
CURRENT STATUS
 Purchased equipment, installation and maintenance
services from Ericsson, Siemens and Nokia
 Open standard GSM technology enabled them to
change their suppliers with relative ease
 Frequent change of vendors made process of
tendering, negotiating and working with the vendors
to install the extended capacity tiresome
 Core competencies was in operations not in IT design
hence much of the architecture software and hardware
design could be outsourced
CURRENT STATUS CONTD..
 Contracted with IBM, Sun Microsystems, HP and Oracle
for business support software and hardware architectures
and customer management systems
 Incompatible inherited IT systems
 Technology changes and requirement changes leading to
frequent outdating of equipment and software
 Established vendors did not provide all the solutions
 Fragmented outsourcing was not enough to meet all
demands
 They are currently aligned with Bharti’s core competency
PATH BREAKING DEAL?
 Presently in the telecom industry
Network equipment vendor revenue generation is
from number of boxes they have sold rather the
network coverage it provides
 According to the proposed deal
This will move the network equipment vendor
and operator on same side as the former is paid based
upon amount of erlang capacity installed. Here entire
responsibility of buildup, maintenance and servicing
of the telecom network is given to equipment vendor
PRO’S
 Opportunity to do more business with a major player
like Bharti
 Since Bharti is expected to grow very fast in the
coming years, If IBM didn’t sign this deal it might
affect it’s business with Bharti and other operators
CON’S
 Investing in hardware, software and people on behalf
of Bharti without accurate information about revenues
it can generate gives rise to considerable risk
 Need to accommodate the manpower from Bharti
 They will be expected to cater to software and
hardware applications not presently supported by
them
OUR OPINION
Evaluating the pro’s and
con’s we recommend IBM
should agree to the
proposed deal