Time for telcos to rethink business models
By Keith Gurden, Business Development Director, Indigo Telecom Group.
As seen on ITProPortal on 22/09/2020
The best way to handle the perfect storm of skills shortages and pressure to deliver next-generation networks is to outsource.
Keith Gurden, Business Development Director at Indigo Telecom Group, offers advice to telcos on forging the right kind of partnerships.
Apple doesn’t actually make iPhones; Airbnb offers travellers accommodation without owning any accommodation; Uber has become a global leader in the taxi business without owning any taxis. While these companies could be seen as extreme examples of the ‘outsource everything’ mantra, they reflect a trend towards business reinvention and disruption that even the most established companies would do well to take onboard.
The principles of large-scale outsourcing and more targeted managed services are now widely understood as an effective way to reduce costs around areas of the business that are not considered core, while freeing up resources to concentrate on the areas that are. As a consequence, companies have grown accustomed to everything from IT helpdesks to HR being handed over to third-party providers.
In the disruptive times we live in, I would argue that every business needs to do some soul searching and identify what constitutes core business and what can be outsourced. This is certainly true of telecommunication companies. They pride themselves on network expertise, geographical knowledge and technical prowess, and often struggle with the prospect of outsourcing network builds and maintenance.
Getting closer to customers
The argument against outsourcing such services goes something like this: if a telco can’t build and manage networks, then what precisely are they there to do? The simple answer is to serve their customers to the best of their ability, by focusing on revenue-generating activities, having razor sharp sales, marketing and customer service, and using more efficient customer engagement models. This is how they win.
We are living in an era of unprecedented competition, where it’s easier than ever for customers to simply switch service providers. Fear of churn has pushed the concept of customer experience up the agenda and telecoms providers, like almost every other business, have to prove their worth by not just meeting customer needs but by constantly adding value.
Building and developing trust with customers can be extremely hard work. So too is building out and maintaining networks. In both cases, you need managerial expertise combined with on-the-ground skills to ensure success. So how do you resource them both adequately? At a time of skills gaps and talent shortages, the answer is with third-party help. The bit that telecoms companies struggle with is the realization that it makes more sense to outsource technical skills than business competencies, not least because in-house technical expertise is expensive and harder than ever to find.
If you choose to keep telecoms maintenance in-house, you have to factor in the time and costs involved in continuously upskilling engineers, encouraging them to achieve the accreditations they will need to work with leading-edge and continuously evolving technologies. The math around outsourcing starts to add up and make sense.
Bridge the skills gap
An unfortunate irony is that we are on the cusp of game-changing networks, at a time when the engineers who should be delivering them have already left the industry for other sectors. Telecoms companies find themselves in a perfect storm. The skills shortage is compounded because they are under immense pressure from stakeholders – shareholders, investors and customers – to deliver next-generation network services and hit all kinds of targets.
The solution is outsourcing; the challenge is finding the partner with the right combination of equipment knowledge, technical expertise, project delivery capabilities and geographical reach. People and technology are crucial, but be warned, people are not as reliable or predictable as technology. Different mindsets and personalities will be important during the lifetime of an outsourcing project – those who design and build the network infrastructure, including any fine tuning, will be markedly different to the team that comes in to manage the outsourced service.
If the management team lack the skill and experience to build on the success of the project team, gains will quickly be lost. Look for prospective partners with end-to-end capabilities and a track record of successful execution with blue-chip customers. Make sure to check the scope and scale of their engineering expertise and industry know-how. They need to be able to manage every phase and aspect of the infrastructure project, ideally with project management experience. You might need to replicate outsourced services in multiple jurisdictions if your company operates across international borders, so look for a partner with a global footprint that matches your own.
Forging a proactive partnership is key
Not all outsourcing partners are equal. You need someone who will actively improve on what you have currently. Some will provide an acceptable reactive service, but this industry is all about being proactive. You need them to have relationships with the full gamut of equipment vendors to future proof investments and avoid procurement dilemmas down the track.
And read the small print. Not just contract SLAs but also the fine detail in the project scope to make sure that the service provider is completely aligned with your targets and goals. Effective lines of communication will be needed between the two parties to establish the trust that is essential for outsourcing partnerships to flourish.
Ultimately, outsourcing offers a range of benefits including – plugging skills gaps, cutting costs around procurement, logistics and maintenance – making your telecoms company more dynamic and agile. At a time when expertise has drained away from the sector, it may be your best chance of securing your place in a fast-changing and uncertain future. Make it a priority now to ensure your business doesn’t get left behind.