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Outsourcing and modern global business
Outsourcing and modern global business
Outsourcing and modern global business
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Bharti Airtel Limited
Bharti, based in Delhi, India is a family owned telecommunication business, founded by Sunil Mittal in 1995. Mittal saw an opportunity for his business because the Indian telecom market allowing companies to bid for a government license to operate the first private mobile telecom service in Delhi. Bharti won the bid and became the first private provider in Delhi. In 1998 they were the first to make a profit from their services in India. As Bharti continued to grow they began gaining licenses for mobile telecom operations in 15 out of 23 geographical regions also called circles. Bharti expected to achieve full cover in India by 2005. .” (Applegate, Austin, & Soule)
When Bharti went public in 2002 with the India National stock exchange they raised $172 million and by the end of 2002 they raised over $1 billion through direct investments.
Bharti was faced with many competitors by 2002 and 2003. The total Indian telecom revenue was “8.5 billion and growing rapidly at 17 percent per annum.” (Applegate, Austin, and Soule) To be a top competitor in this market a company would have to lower their unit cost while their shared increased through acquisitions and bankruptcies of other companies. Bharti had several major competitors which were: BSNL, MTNL, Hutch-Essar, Tata, Idea Cellular, and Reliance. In order for Bharti to be competitive in this market that was going to have to provide value services. Services like games, ring tones, and text messaging to name a few. These services needed to be efficient and reliable. They were going to need the best technologies that were available to them. With the constant growth Bharti need a way to be competitive in the growing industry. Akhil Gupta, the former CFO and current managing director, recognized that the company was not able to handle its growth and maintain high customer service along with having to manage its ever changing IT and network services. His proposed idea to handle the challenges Bharti was faced with in their IT and network services was to outsource those areas in which Bharti was not completely competent in. Could outsourcing be the way of the future for Bharti?
Success Factors for Growth in the Indian Telecom Market
In India’s highly competitive market Bharti must be mindful of how to keep its core competency ahead as well as trying to develop new ones.
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
The company began in 1987 as a private limited company, then converting to a publicly traded company in 1992. Throughout the next several years, Satyam began expanding to other countries though joint ventures, partnerships, and greenfield investments (Gaur & Kohli, pg 1)
In a competitive environment where market is changing instantly, organizations are in a fix to design a strategy that could market their products enticing the consumers to buy their products and services. Market is the arena for business gladiators who fight out for maximum share and profitability and this is possible only through effective marketing strategy. Competing in present economy means finding ways to break out of commodity status to meet customers’ needs better than competing firms (Ferrell and Hartline, 2010). The intensity of competition has increased after the introduction of media and internet where the companies present their product in the best way through advertisements, product reviews, blog entries, etc. With the advancement in technological innovations, companies have found various ways of providing services to the consumers in a cheaper and effective way and this has resulted in communication revolution in late 1990’s as the cellular technology was unfold in most of the regions. Singtel Optus Pty Limited (Optus) is one such company that has evolved during this period as a leader in integrated communications and this paper is assumed to make an analysis of the company’s marketing strategy and its financial position in the market industry.
Moreover, Ansoff suggested some main direction that companies should follow to develop market and product conditions. The market development and differentiation strategies suggest that in order to increase sales, WRSX have to offer their services in new developing markets such as China or India. The strategy for market development gives the opportunity to expand their service in order to attract competitors' clients and to expand in unreached markets (Barry, Witcher and Chau, 2010). Potential solution could be acquisition of UK agency competitor to assist WRSX to enter new market quicker and smoother go through the barriers of entry such as government regulations and different culture.
The market for IT industry was huge and expanding at a fast pace. However the market leaders were Accenture and IBM which had a negligent market share and rest was captured by small enterprises. Indian companies also ventured in the industry and due to their competition, IT multinational giants had to increase their base in India. Due to high opportunities, attrition rate was also high in this industry. As a result Indian companies like Wipro, Infosys increased their base level salaries. During this phase, Indian economy was transforming towards an era of information and knowledge. This can be seen from the fact that contribution of services towards the economy’s GDP was higher than 18% in 2001 as against in 1980. No other industry had done better standing against global competition. The annual exports had always been over 50% over a decade. U.S.A. share represents highest with 61% and about a third of Fortune 500 companies outsource their software work to India. To foster development, Indian government has taken a number of steps like liberalization of policies and providing necessary capital and infrastructure to foster growth. Thus Indian environment has been conducive for growth. (Ref: Indian Embassy.org) Competitor analysis- The market for IT industry was fairly competitive with IBM and Accenture as global leaders and rest of the market was pretty diffused. IBM and Accenture had strong brand and a global presence with a large customer base. They also offered panoply of services viz. technology implementation, business consulting, offshore services, customer relationship management etc. Both offered breadth and depth of services. IT market in India offered technical and business consulting with Tata Consultancy Services which was the market leader in IT exports and Wipro Technologies and Infosys being other major market players. TCS offered consultancy services, IT services, asset based solution etc. Wipro was third largest IT provider with service offerings in IT consulting, software solutions, BPO etc. Both had a strong global presence. Intensity of Rivalry: Rivalry amongst competitors was pretty intense as can be seen the Indian competition caused IBM to increase their presence in India. However leaders like IBM and Accenture had a wide range of service offerings so competition was only amongst few sectors. Rivalry was to hire the top talent as human capital is the most important thing in the IT sector. This is the reason that attrition rate lead to a rise in pay packages.
Kesavan, R., Mascarenhas, O. A., & Bernacchi, M. D. (2013). Outsourcing Services to India: A Review and New Evidences. International Management Review, 36-44.
The Harvard Business School case study Silvio Napoli at Schindler India summarizes the various problems and issues facing Schindler India regarding its entrance into the new foreign market, India. Schindler Holdings Ltd. is a Swiss-based manufacturer of escalators and elevators which is looking for potentially entering into the Indian elevator market. Main executive committee members predicted that the Indian industry showed great promise in terms of future growth potential. The company’s objective was to manufacture standardized elevators at a cost lower than current customized elevator market. Silvio Napoli, who is vice president of Schindler in Asia, was chosen to lead the new entry into India. To successfully enter and penetrate the Indian market, Silvio and company needed to consider a variety of factors like but not limited to: mode of entry and type of strategy to implement, organizational structure, outsourcing and logistics approaches, marketing, and domestic and global hiring procedures.
India is a nation that is on the move towards becoming one of the leaders in the global economy. While the country still has a long way to go, it is making significant strides towards competition with nations such as the United States and England. Indian leaders have been moving towards "a five-point agenda that includes improving the investment climate; developing a comprehensive WTO strategy; reforming agriculture, food processing, and small-scale industry; eliminating red tape; and instituting better corporate governance" (Cateora & Graham p. 56, 2007). These steps are geared to begin India's transformation from a third world nation into a global economic leader. The current marketing environment in India is in transition, with both similarities and differences in comparison to the marketing environment in the US.
Bharti proposed to outsourced all of the core functions to global vendors and only focusing on sales, marketing and finances in-house. Overall concerned of partnering with vendors included contract risk, excessive dependence, reduced control and cultural differences.
Another way to keep up with competition is by encouraging the development of new business ideas. The company may have an incubation centre where raw business ideas are natured to reality. This would ensure competitiveness is guaranteed even for the
...urcing services, the company operation will be became a mess. This is because one organization can’t run a lot of task or project at one time. Therefore an organization need outsourcing in the way to help their organization run smoothly.
the staff who now had much less of an 'easy time' in work. Not only
Bharti Tele-Ventures Ltd. (BTVL), the country’s leading telecom conglomerate is one of India’s leading private sector provider of Tele-communications services. The other companies under this group are:-
...on in today's market, but in order to remain competitive they must find a way to distinguish themselves from these competitors.
AirAsia is an Airline Company established with the objective of providing flight services to everyone. This company has been recorded as one of the best flight service providers in the world and has been receiving recognition awards since 2001. It provides services to over twenty countries hence this company seems to have a quite large market share and servicing the loan will not be a problem to this company. AirAsia Company has also been paving way for cheap aviation through effective and efficient structures and a determination for good performance.