Outsourcing

Topics: Mobile phone, Mobile network operator, Telephone company Pages: 27 (8965 words) Published: July 14, 2013
economic and social upgrading in global production networks

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

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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 Singh Mehta for generously making available his calculations of financial and other performance data of Bharti Airtel.

This document is an output from a project funded by the UK Department for International Development (DFID), the Sustainable Consumption Institute (SCI), the Chronic Poverty Research Centre (CPRC) and the Economic and Social Research Council (ESRC). However, the views expressed and information contained in it are not necessarily those of or endorsed by the funding organizations, which can accept no responsibility for such views or information or for any reliance placed on them.

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Abbreviations
ARPU BPO BRICS CM CMT CPRC DFID DTH EMS ESRC FICCI GPN GPS GSM GVC ICRA IT JV MNC MNO NCR ODM OEM PC SCI SIM TRP UK US Average Revenue Per User Business Processing Outsourcing Brazil, Russia, India, China and South Africa Contract Manufacturer Cut-Make-Trim Chronic Poverty Research Centre Department for International Development Direct-to-Home Electronics Manufacturing Service Economic and Social Research Council Federation of Indian Chambers of Commerce and Industry Global Production Network Global Positioning System Global System for Mobile Communications Global Value Chain Indian Credit Rating Agency Information Technology Joint Venture Multinational Corporation Mobile Network/Service Operator National Capital Region Original Design Manufacturer Original Equipment Manufacturer Personal Computer Sustainable Consumption Institute Subscriber Identity Module Television Rating Point United Kingdom United States

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Introduction
It has been argued for several years now that the phenomenon of ‘global production sharing’ through global value chains (GVCs), around which a substantial literature exists, has helped developing countries expand export-oriented manufacturing activity. GVCs represent the significant unit of organization of international production, wherein ‘lead firms’, largely multinational corporations (MNCs), coordinate production across...

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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
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