Should Bharti Outsourcing? Advantages and Disadvantages?
I would consider the outsourcing agreement by Gupta with some reservations. Bharti is a relatively small telecomm company facing a large expansion in customer base. They need a lot of resources, in terms of human and financial capital. Outsourcing Advantages: In the article it mentioned that it is very difficult to reach the right personnel for the right job. Partnering with a well established vendor like IBM and will solve this problem. By outsourcing Bharti can also avoid high upfront cost which would typically take Bharti at least six-months to secure financing. Outsourcing can provide a quick start to fulfill the quick expansions needed such as equipment (Ericsson, or Nokia, or Siemens) and IT (IBM) are which are 2 major parts of a telecom company. The agreement with Ericsson, or Nokia, or Siemens and IBM are three and five years respectively. At the end of each contract Bharti can either reach a new agreement with the current vendor, find a new vendor or build its own replacement. Over these years of the contract, Bharti can learn from the world leading vendors and prepare to build a team custom to its own need. Disadvantages: Bharti has to transfer 1000 employees to the vendor as it decided to outsource. This has taken one of the most valuable resources that Bharti has and weakened its power to build its own team in the future.
2. Bharti’s major concerns
Vendor collaboration would be one of the major concerns Bharti may have. There are only hand full of qualified vendors out in the market they can use. These vendors become a critical part of their business. Bharti (mother company, Indian), Ericsson, or Nokia, or Siemens, (Equipment , European), IBM (IT, American), are three very different cultures, work styles, and schedules that can pose a major conflict. Being able to make sure these three parties integrate smoothly can be a challenging but crucial for Bharti.
Lock into a vendor – Since IBM