)

What must Bharti do well to succeed in the Indian mobile phone market? (1)

y Obtaining mobile licenses in India s all 23 mobile

operating circles & obtaining fixed line licenses as well by studying the potential market (2001-02: 15/23, 6/23) y Similar to Bharti-SingTel deal launch more national and international long distance service (e.g. AirtelZain telecom - Africa) y Sustain economies of scale (to tackle competition) by using their large N/W

What must Bharti do well to succeed in the Indian mobile phone market? (2)

y Prepare for obtaining 2.5G and 3G licenses offer

Value added services data transmission, SMS, Games, ring tones and ring-back tones, Wi-Max, N/w games, mobile internet services, social media marketing y Corporate Fixed line services, fax, broadband, leaseline, post-paid connections, group calling facilities, happy hours etc. y Online recharge (prepaid), payment (post-paid) services

What must Bharti do well to succeed in the Indian mobile phone market? (3)

y Focus on ARPU (Avg monthly revenue per customer y y y y

unit) Value added services Focus on regional mobile services (Spice, BPL) Acquisitions Increasing customer base (market share) Offering new (innovated) products (billing plans) and services Tie-ups (Blackberry-Airtel, iPhone-Airtel)

What must Bharti do well to succeed in the Indian mobile phone market? (4)

y Long term relationship with vendors reduced cost,

better service y Efficient capacity utilization of available telecom setup (managing Erlangs measure of telecom traffic) y Use better traffic estimation models to predict capacity of different n/w configurations y Effective process of planning-tendering-financingpurchasing-installing in order to reduce time-tomarket

What must Bharti do well to succeed in the Indian mobile phone market? (5)

y Acquire and retain the best and the brightest human

resources y Outsource IT and Telecom technology to the best vendors and focus on core competency

Bharti Airtel Core competencies

y Operations y Sustainable competitive advantage y Focus on revenue fetching services y Continuous improvement and innovation y Healthy vendor relationship y Encourage use of excellent technologies vendors y Distribution network management and complexities related to call management y Efficient management of network instruments

Q.Do you think Bharati should enter the outsourcing agreement outlined by Gupta? What do you see as advantages and disadvantages of such agreement? How do the different outsourcing agreements work towards building these core competencies?

y Ans:
y y

Yes Bharati should enter the Outsourcing Agreement.

Advantages
y High bargaining power for Bharati, due to high competition between y y y y

service providers. Uncertainties in capital expenditures kept low.(decision making has to be apt) Transferring equipment investment risk to vendor. Avoid excess capacity wastage.(by implementing pay for use) Lower Human resources cost due to their transfer to vendor companies.

Disadvantages of outsourcing:
y Inertia from existing employees to transfers. y More the outsourcing core business more the dependency on

vendors. y Limitation of Bharti to use creative new application IBM deal would limit them to their applications. y Transfer of network assets built by Bharti.

Bharti should go for outsourcing for following reasons:

y Proper governing mechanism. y Huge capital expenditure help growing customer base. y Rapidly changing trends in telecom industry leads to equipments

purchased to be out of use. y Keep the IT applications that are used to tackle competition in-house. y Risk diversified by involving three vendors instead on one.

Question 3
If you were Bharti, what major concerns would you have about entering an outsourcing agreement with IBM? With Ericsson, Nokia or Siemens?

Bharti s concerns
Assuming Bharti s role:  Managing different vendors  Risk of exposing business processes  Synergies between vendors
Might lead to vendor consolidation

 Protecting IP, Copyright Focus should be on deriving values from IBM's expertise to Airtel AND NOT from Airtel's expertise to IBM and in turn to other IBM customers

Bharti s concerns continued...

 Limitation to use creative new application  Issues related to asset ownership & maintenance  Payment terms, Payment milestones, SLA parameters  Inertia of existing employees  Resource absorbing by vendors leading to employee

unrest More the business outsourcing more the dependency on vendors

How would you structure the agreements to address your concerns and capture any advantages you have identified? What governance mechanisms would you design for the agreements?

Governance Mechanism
Senior management will take care of the financial approval and strategy formulation and appointing the leadership committee Tracking of progress , check alignment of process matrix, Report to the higher management Monitoring design of overall architecture, Maintaining relations with different vendors, monitoring the different processes

Senior Management

Internal team Internal team

Leadership Committee

Architecture committee

IT Relationship Managers

Process Team along with IT team

Ericsson , Nokia , Siemens /IBM

Agreement design- how to gain advantage ?

y Hand over network management & operations in phases and under y y y y y y

constant monitoring of internal team Software & hardware apps not supported by IBM to be available even if IBM gets the contract IBM to co-operate with other vendors Give large fundamental innovation to IBM but keep quick shots in house to reduce time to market of new IT based services Recruitment of new staff members to be taken care by the vendor and vendor to absorb the new staff members Transfer equipment investment risk to the vendor Revenue sharing agreement with the vendor

Major concerns
y IBM first time sharing revenue model of payment y Return on Investment subject to company s

performance y Dynamic environment of telecom y High demands placed on IT y Working closely with vendors and Bharti

Agreement
y As the revenue is shared , the agreement should cover minimum costs involved and a component of fixed return y Quality of IT services should be well defined in SLA y Mutual agreement on quality of applications and services quality y Flexible terms of contract as it is covering period of ten years in a very dynamic environment y IBM to safeguard itself can take some decisions provided the terms promised to Bharti remain the same y Value delivery based model instead of time or resources based y Innovation and best practices

Governance mechanism
y Risk Assessment-Periodic and clause based y Resource Management- Long term and skills based y Performance Management- SLA and Quality y Value Delivery- Customer satisfaction y Strategic Alignment- Excellence and best practices

Governance mechanism
Account Manager

Delivery Head

GPM

PM

Bharti

Thank you !!