What do you see as advantages and disadvantages of entering the outsourcing agreement outlined by Gupta?
Outsourcing vendors lack Bharti’s expertise in operations. The CTO has also dismissed the outsourcing idea on the same grounds
Proposed vendors i.e. IBM may not agree to use or improve the existing software or hardware applications not developed by them
Involves the transfer of nearly 1000 employees – culture difference, risk of lay-off by vendor company, acceptance issues for all sides
Includes the risk of excessive dependence on a single vendor
Major and unfamiliar risk for the IT firms involved.
Most importantly, apprehensions on all sides. Lack of enthusiasm for change among directors, management – general feeling of negativity – at Bharti
Involves transferring equipment investment risk to the vendor firms
Better architecture software and hardware design by external vendors. Advantage of expertise
Can move from a fragmented network of vendors to a single vendor that would provide a comprehensive end to end management service
Sharing of burden constituting network quality would be henceforth jointly determined by both Bharti and the vendor
Reduced capital expenditure i.e. Bharti would pay only for the installed capacity – erlang.
Would be expanding rapidly in the coming future, is presently facing huge upfront investments to support its growth for the next 10 years – best solution on paper for cutting on capital expenditure
Best to counter human resources issue as in-house network development would necessitate hiring and retaining more than 2000 people where it was already grappling with resource scarcity
2. What would be your major concerns? How would you structure the agreements to address your concerns?
The major concern at present is to reduce the capital expenditure and keep up with the IT expansion at the same time. One solution as presented is to enter into an outsourcing agreement with IT...