Outsourcing

Powerful Essays
Topics: Mobile phone
economic and social upgrading in global production networks

New strategies of industrial organization: outsourcing and consolidation in the mobile telecom sector in India

1

Ambedkar University, Delhi, India

Email: sumangala@aud.ac.in

Sumangala Damodaran1

May 2013

Capturing the Gains 2013

Working Paper 32
ISBN : 978-1-909336-87-2

Abstract
The paper discusses the experience of the mobile telecom sector in India in terms of its business organization. There is a high level of outsourcing of activities, including those such as network management, which would usually be included within the core competence of mobile telecom companies. This outsourcing strategy, pioneered by Bharti Airtel, has resulted in considerable cost savings and increased profits for a small number of core employees of the lead firm. At the same time, in some outsourced activities, such as tower construction, there is a large incidence of casual and contract labour, all forms of precarious employment of the informal variety. However, because of the high level of oligopolistic competition among mobile telecom service providers, some of the benefits of lower cost have been passed on to consumers in the form of low-cost services. But the Bharti Airtel outsourcing strategy is important in pushing the limits of what could be called core competence in a business model dominated by outsourcing.

Keywords: Mobile telecom, industrial organization, outsourcing, impact on workers, profits, mobile phone users

Author

Sumangala Damodaran is Associate Professor, School of Development Studies, Ambedkar
University, Delhi, India.

Acknowledgements
The author wrote this paper with substantial research assistance from Anindita Chatterjee and Vikas Dalal, who conducted the field study and collected the information that was necessary. Thanks are owed to Joonkoo Lee and Dev Nathan for their comments and suggestions, which have helped improve the paper. Thanks also go to Balwant



References: Business Standard (2010). ‘GTL to acquire Aircel 's 17,500 towers for Rs 8,400 cr’. 1 January. Contractor, F. J., Kumar, V., Kundu, S. K. and Pedersen, T. (2011). Global Outsourcing and Offshoring: An Integrated Approach to Theory and Corporate Strategy. Cambridge, UK: Cambridge University Press. Ernst and Young (2012). ‘The world is bumpy – globalisation and new strategies for growth’. Available at www.ey.com/Publication/.../Globalization%20report%20FINAL.pdf (last accessed 27 April 2013). FICCI (Federation of Indian Chambers of Commerce and Industry) and Ernst and Young (2010). ‘Enabling the next wave of telecom growth in India – industry inputs for the National Telecom Policy 2011’. New Delhi: FICCI and Ernst and Young. ICRA (Indian Credit Rating Agency) (2009). ‘Telecom infrastructure industry in India’. New Delhi: ICRA. Lee, J. and Gereffi, G. (2013). ‘The co-evolution of concentration in mobile phone global value chains and its impact on social upgrading in developing countries’. Capturing the Gains Working Paper 25. Mehta, B. S. (2013). ‘Capabilities, costs and networks: impact of mobile phones in rural India’. Capturing the Gains Working Paper 29. Milberg, W. (2004). ‘The changing structure of trade linked to global production systems: what are the policy implications?’ International Labour Review 143(1-2): 45-90. Milberg, W. and Winkler, D. (2010). ‘Trade, crisis, and recovery: restructuring global value chains’. Policy Research Working Paper 5294. Washington, DC: World Bank. Prahalad, C. K. and Hamel, G. (1990). ‘The core competence of the corporation’, Harvard Business Review 68(3): 79-91. Sarkar, S., Mehta, B. S. and Nathan, D. (2013). ‘How social upgrading drives economic upgrading by Indian IT majors: the case of telecom services’. Capturing the Gains Working Paper 27. Sen, S. (2012). ‘Handset manufacturing value chain – what would it take for India to actualise its potential?’ Electronics Bazaar, January. Subramanyam, R. (2011). ‘Managing core outsorucing to address fast market growth: a case study of an Indian moible telecom service provider’. In Contractor et al. (2011). Wilde, J. and de Haan, E. (2006). ‘Critical issues in the mobile phone industry – high cost of calling’. Report prepared by SOMO. 19 economic and social upgrading in global production networks Capturing the Gains brings together an international network of experts from North and South. The research programme is designed to engage and influence actors in the private sector, civil society, government and multi-lateral organizations. It aims to promote strategies for decent work in global production networks and for fairer international trade. Published by: Capturing the Gains The University of Manchester Arthur Lewis Building Oxford Road Manchester M13 9PL United Kingdom capturingthegains@manchester.ac.uk www.capturingthegains.org 20

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