Strategic Outsourcing at Bharti Airtel Limited

CaseId – Bharti

Case Title - Strategic Outsourcing at Bharti Airtel Limited

Q1. Gupta’s proposal is comparable to “giving the family jewels to outsiders.” Why, or why not?

Yes, if the core competence of a company is equivalent to family jewels, Gupta’s proposal is comparable to “giving the family jewels to outsiders”. Network management and operations expertise define a company like Bharti, it is the competitive differentiator and it takes a considerable number of years to achieve excellence in this area. Prioritizing the key revenue circles, if the deal goes through, will be done by an outside vendor i.e. Bharti will lose control some of the important areas that affect the business. How a network operator tackles the responsibility of maintaining the network in good working order decides its sustained profitability. By outsourcing the primary activity of a company, Bharti could be perceived as being at the “mercy of its vendors”.

However Gupta’s proposal regarding IT outsourcing is not comparable to “giving the family jewels to outsiders”. IT is not the core operation of Bharti, and it could always tweak the deal to let in on more than one vendor. But one should carefully consider the capabilities of the IT vendor to maintain customer services, software, hardware and negotiations with their suppliers objectively.

Q2. Assume the role of IBM or Nokia. What major concerns would you have about entering an agreement with Bharti?

a. Firm and the outsourcing partner share risk with respect to time, price, quality and other terms of the contract

b. Scope of mistrust between interested firms should be minimized by enforcing strong agreement

c. Cultural differences may become issue as the vendors are big international giants

d. Possibility to stuck with huge investment in network equipment that they made for Bharti, any underutilization may cause loss for the outsourcing firms

e. Necessary support should be given by Bharti for cost optimization