Bharti Airtel's outsourcing strategy and competitive advantages

Information Technology

Case

Bharti Airtel is the world's fifth largest telecom company and it is famous for outsourcing everything except finance, marketing and sales. In the early days Bharti used to do all the business processes itself and it used to cost much more. Then they came up with the idea of outsourcing everything and just keep the departments of core competencies. And they kept marketing because in today's world every telecom company is providing the same services. The only difference between them is brand positioning that is how a product or a brand's image is in the consumer's mind. So, they made sure they pay specialized attention on that and for that they hired the famous Asian musician A.R Rehman for the special Airtel tune that attracted people and associated them with AirTel.

Airtel outsourced their IT processes to IBM, entire network operations to Ericsson and Siemens along with Alcatel Lucent recently and the transmission towers to another company

What type of activity and resource was outsourced?

Bharti Airtel outsourced their all IT (information technology) processes to IBM ( international business machines) and entire network operations to Ericsson and Siemens. They also hired companies that are doing their transmission tower tasks.

4. Was the outsourcing effective?

Yes, it was very effective as highlighted in the answer of question 2 it saved a lot of money and Airtel spent that money in inventing new ways to market their Service and it also helped them to focus on the areas of their core competencies and use their market grew it didn't affect the cost of their processes as it was signed deal with the companies that Airtel hired and they had to pay them a fixed amount irrespective of the customer strength.

5. What benefits and/or what costs or detriments were experienced as a result of outsourcing?

They hired the leading companies in their areas of expertise and it cost them a little in the beginning but eventually outsourcing paid off as they gained an edge in the market over their competitors and made people loyal to their brand/service. When their market grew and they captured enough customers they started to reap the monetary benefit that is profiting from the operations and became the fifth largest Telecom Company of the world.

6. Pepsico is consumer market giant and is available in almost every country that is presently on the globe. Its most famous product is Pepsi Cola and is very famous for its sweet taste. Pepsi cola's quality has never gone down and once PepsiCo tried to change the taste of Pepsi Cola and it failed and they had to switch back to old taste. Now the question arises how they manage their quality around the globe?

The answer to this simple question is very complex to PepsiCo because if they wanted to gain profits and reap benefits out of their name they could've outsourced the manufacturing of the key formula of Pepsi Cola and its sister drinks. That could've saved millions or billions of dollars that they are now spending on the information technology and networking. But by doing this they could've lost the loyalty and brand recognition around the globe so what they did was when they expanded they started establishing their offices in different countries and those offices outsourced bottling companies and the main role of PepsiCo was to provide them with mixture that they had to mix with carbonated water to form Pepsi Cola. By doing this they made sure that the quality is there in the product. Taste still varies around the globe as mixers around the globe mix according to their consumer market and Pepsi Cola's taste is same everywhere but may vary in terms of mixture's concentration.