Outsourcing archives - Uncommon Wisdom
Home > IT Blogs > Uncommon Wisdom >

Uncommon Wisdom:

outsourcing

Jul 10 2009   2:06PM GMT

Outsourcing operations trend appeals to carriers, too



Posted by: Tom Nolle
outsourcing, managed services, network operations center (NOC), Sprint, Ericsson, Alcatel-Lucent

Sprint is outsourcing its network operationst o Ericsson, the latest player in a series who have taken this sort of step. Alcatel-Lucent has been the beneficiary of most of these deals recently. One might think the whole of the carrier space is outsourcing network operations, but that’s an oversimplification.

Verizon, for example, says it has no plans for network oursourcing. Most of these deals are for pure “NOC” or operations center outsourcing. For some providers, like wireless carriers, that may be a big chunk of total network operations costs, but for access providers, the physical outside plant maintenance part is the great majority. Therefore, everybody doesn’t save a bundle with this kind of deal. Second, the operators tell us these deals are really seen internally as a kind of extended network integration process.

Operators are finding it harder to acquire and retain skilled network personnel and are concerned about the burdens of moving into new technology areas. In modernization and network enhancement projects they’re turning increasingly to integration deals, and these are extending into ongoing operations. Ericsson is likely hoping to use Sprint to develop some U.S. economy of scale in its outsource operation.

AddThis Social Bookmark Button     0 Comments     RSS Feed     Email a friend

May 5 2009   12:13PM GMT

Network outsourcing trend grows from operations economics



Posted by: Tom Nolle
network management, outsourcing, Sprint, Ericsson, Alcatel-Lucent, NSN

Sprint is rumored to be looking at outsourcing its network management/operations to Ericsson, another data point in the growing number of management outsource deals. While there are certainly some potential savings involved in this sort of thing, we believe it’s actually pretty clear that savings per se are not the driver.

Sprint and other large operators are more than large enough to reach full operations economies of scale internally with the right tools and support. The problem is they don’t have that, and there’s no prospect of such tools arriving on the scene because of logjams in the standards processes. The outsourcing trend, in our view, is the result of long-standing operator angst about escalating operations costs and risk, and the lack of any systematic vendor support for new options to hold down costs.

By negotiating a deal with an outsourcer, operators can let the outsourcer do what’s needed, defying standards and other factors. In the long run, this may create an enormous advantage for vendors like Alcatel-Lucent, Ericsson, and NSN, which have large and successful outsourcing businesses. After all, while outsourcers don’t dictate network purchases, they are certainly in a position to influence them.

AddThis Social Bookmark Button     0 Comments     RSS Feed     Email a friend

Mar 26 2009   12:38PM GMT

EU telcos weigh economics of network management outsourcing



Posted by: Tom Nolle
network management, outsourcing, telecom service providers, Alcatel-Lucent, NSN

The EU says telcos there are weathering the economic storm so far, better in fact than most industry sectors. This contrasts with other stories that telcos are outsourcing network management to reduce costs.

We think that the truth of the situation is closer to the EU version. We’ve found no indication in our surveys that telcos see network management outsourcing as a major path to cost reduction, and if one thinks about the issue, it is clear that unless the outsourcer has better economy of scale than a telco, it’s doubtful that such a move could be a win-win.

What we think is happening is that telcos are realigning their business models based on their current conception of monetization opportunities and risks. In some cases, this demands focus on new areas, and in others it suggests that there are activities better outsourced to professionals. We think some of the big players making deals with Alcatel-Lucent and NSN fit this model. There simply is not enough money on the table to make an outsource-for-cost-reduction decision prudent. For Tier 2/3 providers, however, labor availability issues may make an outsource decision mandatory.

AddThis Social Bookmark Button     0 Comments     RSS Feed     Email a friend