Bharti Airtel
1. Introduction
Bharti Airtel Limited is a major Indian telecommunications firm, with a particular focus on operating in the mobile services market. Founded in 1995, the company quickly tried to exploit growth opportunities arising from the liberalization of Indian telecommunication markets. The family owned business was soon able to generate profits and extend market shares. However, the pace of company growth challenges the firm in terms of being able to setup necessary infrastructural elements, both within the firm, i.e. IT- and personnel-wise, as well as “outside” the firm, i.e. building up the relevant network coverage structure. Bharti therefore considers “reverse outsourcing” of IT infrastructure and network setup and maintenance to well-established firms from developed countries, such as IBM, Nokia and Siemens. This case report examines the proposed outsourcing deal both from the perspective of Bharti and from the perspective of potential vendors in order to find the most appealing solution for both parties.
First we talk about the success factors in the Indian mobile phone market and Bharti’s core competencies. Second we will look into the outsourcing agreements outlined by Gupta and discuss the advantages and disadvantages of such agreements. Furthermore we look into the question how the contracts might affect Bharti’s core competencies. Third, we want to elaborate on the major concerns about entering in an outsourcing agreement with Ericsson, Nokia or Siemens and IBM respectively. Additionally we propose some solutions to the problems identified previously in the form of governance mechanisms for the contract. Finally we assume the role of IBM and Nokia to talk about the issues they might have when entering an agreement with Bharti and approach the question of appropriate governance mechanisms from the vendor side.
2. Bharti’s core competencies & strengths
Since its foundation in 1995 Bharti has been a major player in the Indian telecom market. After
Bharti Airtel Limited is a major Indian telecommunications firm, with a particular focus on operating in the mobile services market. Founded in 1995, the company quickly tried to exploit growth opportunities arising from the liberalization of Indian telecommunication markets. The family owned business was soon able to generate profits and extend market shares. However, the pace of company growth challenges the firm in terms of being able to setup necessary infrastructural elements, both within the firm, i.e. IT- and personnel-wise, as well as “outside” the firm, i.e. building up the relevant network coverage structure. Bharti therefore considers “reverse outsourcing” of IT infrastructure and network setup and maintenance to well-established firms from developed countries, such as IBM, Nokia and Siemens. This case report examines the proposed outsourcing deal both from the perspective of Bharti and from the perspective of potential vendors in order to find the most appealing solution for both parties.
First we talk about the success factors in the Indian mobile phone market and Bharti’s core competencies. Second we will look into the outsourcing agreements outlined by Gupta and discuss the advantages and disadvantages of such agreements. Furthermore we look into the question how the contracts might affect Bharti’s core competencies. Third, we want to elaborate on the major concerns about entering in an outsourcing agreement with Ericsson, Nokia or Siemens and IBM respectively. Additionally we propose some solutions to the problems identified previously in the form of governance mechanisms for the contract. Finally we assume the role of IBM and Nokia to talk about the issues they might have when entering an agreement with Bharti and approach the question of appropriate governance mechanisms from the vendor side.
2. Bharti’s core competencies & strengths
Since its foundation in 1995 Bharti has been a major player in the Indian telecom market. After