Strategic Outsourcing at Bharti Airtel Limited

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  • Topic: Bharti Airtel, Sunil Mittal, Mobile phone
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  • Published : August 23, 2012
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STRATEGIC OUTSOURCING AT BHARTI AIRTEL LIMITED
Case summary by Aris Metin

THE COMPANY: BHARTI AIRTEL LIMITED
A family or close to family-run business (Sunil Mittal as Chairman) The first private telecommunications service provider in India to launch national and international long-distance service Founded by Mittal in 1995 (with $900 start-up capital)

With mobile licenses for 15 (out of 23) total circles and obtained fixed-line licenses to become the first Created to take advantage of the liberalization of the Indian telecom market Expanded through acquisition of licenses for mobile operations; selling 20% equity interest to Warburg Pincus, New York Life, Asian Infrastructure Group, IFC and SingTel. Went public in 2002, raising $172 million in its IPO, raised over $1billion foreign direct investments

MARKET SHARE / FINANCIAL STANDING
91% of all mobile users in India
2004 year-end revenues of $1,113.4 million with net income of $ 117 million Return on Equity was nearly 12%

CHALLENGES / ISSUES
1.Customer bases was growing 100% per year
2.Budgeting & the tendering process is taking up management time and bandwidth --- needed elsewhere. 3.Managing the IT capital expenditures is a challenge
a.Equipment upgrade is proving to be costly and painful e.g. mail server worth $ 15-20million being thrown away due to system incompatibility 4.Core competency is in Operations not IT design – could not do much of the architecture software and hardware designs 5.Incompatibility in IT infrastructure (inherited systems from acquisitions) 6.Facing a huge up-front investment in IT in order to get the right architecture in place and support growth in the next 10 years. 7.HR scarcity – finding it more and more difficult to hire and retain the best and the brightest. In network development alone, need to hire 2000 – 3000 people

NEEDS
A LEAN and PREDICTABLE cost model
To become the lowest-cost producer of minutes not only in India...
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