Strategic Outsourcing At Bharti Airtel Limited

(a). Problem Essay:

The main problem Bharti Airtel Limited facing is "How to manage its capital expenditures for its operations and how to face the expected exponential growth and a competitive environment." The challenges that the company is facing are

1. Keeping pace with expansion:

Bharti’s customer base is growing at 100% per year. It has its mobile operations currently in 15 circles out of 25 in the country and its fixed line operations in 6 circles. So it is a huge challenge to keep pace with the expansion.

2. Capital expenditures and the risk:

They are facing a severe capital expenditure problem. They couldn’t run new software on the equipment they purchased 2 years ago and it is no longer useful. They require a reliable, predictable usage – linked cost structure. They want to buy fewer boxes but get maximum capacity and coverage to stay competitive.

3. IT Requirements:

They need an IT network that could scale up to match the size of the organization it projected to become in few years. There is a problem of scalability in their system. Their IT infrastructure is further complicated by incompatible IT system it has inherited through acquisitions and as a result it is facing need of huge IT investment to get things in right place.

4. Human resources issue:

It is becoming difficult for the company to hire more and more people and retain the best and the brightest of them.

5. Staying competitive:

By 2002-03, Indian market has grown highly competitive. Due to fall in ARPU (average monthly revenue per customer unit), players fought to capture new subscribers. With industry consolidation, the focus is switching from having a national footprint to the ability to provide value-added services. Opera...

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...e steps that are required to be addressed while coming to deal with vendors. The Proposed idea, looks satisfactory in meeting the outcomes. One thing that should be ensured is that they should incorporate the clauses pertaining to risk in the plan.

(d). Conclusion:

To stay competitive in the fast growing Telecom sector in India, the firms should be efficient and able to retain customers by reducing the cost of service. This can be achieved by better managing its capital expenditures. One of the options available for the Bharti is to go for strategic outsourcing. The case illustrates the innovative approach to gaining competitive advantage through outsourcing and also discusses the pros and cons of outsourcing. If the deal is successful, Bharti can reduce its capital expenditure and can grow with the growing customer base, and can effectively reduce the costs.