Offshoring network operations – No longer a "pipe" dream

There are external enablers to the offshoring case as well. Offshore delivery capabilities have evolved significantly over the last five years with India emerging as a leading destination. With a deep pool of technical graduates, network certified engineers and vocational program students, India continues to counter the inflationary trends and provide labor arbitrage. Other emerging countries such as Romania, Hungary, Egypt, Morocco and Brazil support a smaller scale of non-English based processes. Network equipment manufacturers (aka OEMs) are increasingly shifting their client service operations to these low-cost countries and handling complex design and troubleshooting functions at these locations. On the other hand, home grown Indian IT and BPO companies are rapidly expanding their service portfolio in the Telecom vertical. With IT enablement, lean / six-sigma driven process improvements, customer care support, system maintenance and other integrated services, suppliers are offering a compelling proposition.

There are a few key considerations for initiating and implementing a network operations offshore program:

1. Developing an “unconstrained” scenario first helps identify the full potential of offshoring across the organization. Subsequently, estimating the loss of value due to each constraint helps the stakeholders assess the trade-offs.
2. Exploring multiple labor strategies at an early stage is essential. Optimizing the flex workforce capacity, capping the back-fill positions (due to attrition / retirement) and re-badging (transfer of employees to vendor) are few non-traditional choices.
3. Creating flexible pricing models and gain / risk sharing mechanisms helps address common stakeholder concerns such as unpredictable / seasonal workload, process inefficiencies and legacy infrastructure.
4. Planning the transition should include for scenarios such as inadvertent communications and information leaks that may trigger onshore work disruption. In such situation, offshore operations may need to be commissioned earlier than anticipated.
5. Missing to address the indirect costs such as real estate footprint, IT support and the management overhead in the post-offshoring scenario can erode up to 20% of the savings potential. A comprehensive retained organization and facilities design is essential.

We believe that network operations offshoring is a significant and immediate opportunity for most North American service providers. Network operations executives can ill afford to view offshoring just as a workforce reduction strategy and to perceive tactical HR issues as intractable. Rather, they need to see this as a holistic option to supplement much needed skills and to incorporate leading practices into the organization. Investing in a global talent pool is a key determinant of success as service providers race to deploy new and differentiated services.

Sai Tunuguntla is a Manager in A.T. Kearney’s Communications, Media and High-tech practice and is based out Dallas. He can be reached at sai.tunguntla@atkearney.com