Offshoring network operations – No longer a "pipe" dream

Telecom services providers are leaving no stone unturned to reduce operational costs. Rampant competition, technology substitution and maturing markets require service providers adopt a “no sacred cows” mindset. Labor costs associated with network operations are one of the single largest components comprising 10-15% of total opex. Service providers tried the automation and productivity levers to address the labor intensity. However, as they realized quickly, these levers required complex and costly transformation due to heterogeneous networks and legacy systems. Service providers are now exploring other options for immediate relief.

Traditionally, service providers considered network operations a core competency and hence outsourcing them was taboo. In addition, labor contractual constraints and network security concerns were perceived as insurmountable. However, driven by market facing priorities, a few North American service providers are rethinking the issues. With 50% of the network operations staff performing their functions “at desk,” are there material cost savings if select processes are executed from lower cost locations? Can the operations be effectively coordinated while meeting the service levels?

We found that the answer is an emphatic “yes” to both these questions. Outsourcing operational processes to an offshore vendor can help achieve up to 40% to 50% gross labor savings. These gross savings can be translated into operational savings without significant investments. Early adopters in other geographies have successfully used this model without compromising on service quality and network security. Select processes in network planning, inventory management, service provisioning, testing and troubleshooting, field operations support and network monitoring have been successfully delivered from offshore locations.

Operating within the existing contractual labor framework, these early adopters have seeded the offshore operations with low-risk yet manually intensive processes. At the offshore location, they integrated the customer-facing call centers and technical help desks with new back-office functions. These bold bets are paying off as the early adopters are able to channel resources and attention towards deploying new services and simplifying the operations.