Indian Telecom Sector – Challenging Core Competency (Case Study with Reference to Airtel)

Shriram Mahadu Patil

Abstract


Indian Telecom Sector has grown exponentially over last 5 years with Year on Year growth of 45%, from 98.45 million in 2005 to 900 mn in 2012. It is the second largest market and only next to China. Indian Telecom Market has penetrated to the Teledensity of 76%, while our literacy rate is 74% (as per 2011 provisional census data). Indian telecom Industry has given some unconventional perspective to the world. While the other operators like TATA, Reliance and New comers are "Bleeding", due to fierce Price War, Airtel still has the strong EBIDTA at 40%. Furthermore Airtel is clear Market leader with Revenue Market Share (RMS) of 33% and the Customer Market Share (CMS) of 21%.

The Interesting part which is less known to the world is, Airtel don’t have the core competency in Telecom Network.

Airtel has purchased Spectrum from Government of India. Airtel gives this Spectrum to Nokia Siemens Networks (A Foreign Equipment Manufacturer). Nokia Siemens Networks (NSN) puts the equipments on the Passive infrastructure provided by Airtel through another Managed Service provider, INDUS (Passive infrastructure provider, in layman’s language, Tower company). NSN puts the radiating equipments as needed (as per the survey and Market demand) and convert the Spectrum into Airtime Minutes. Airtel Sell these Minutes through its Sales and Distribution Network (Part of which is through Dealers, Franchisees and Channel partners). All the IT services are managed by IBM. Customer service is outsourced.

Considering the above fact, the Scenario Challenges the popular Golden rules of Business: "Necessity for Core

Competency in the operating Sector" – Classical theory (by Late Shri C.K. Pralhad and Gary Hamel)

The present study focus on the market study of Indian Telecom market so as to study whether business can sustain it’s financial and market competencies by out sourcing the core processes. The study also makes an attempt to study the factors contributing to the failure and success of the strategies.

The research methodology adopted is the market study and the case study of Airtel major player in Indian Telecom Market. The present study is based on Secondary Data from Published reports by Regulatory Bodies like TRAI (Telecom Regulatory Authority of India, COAI (Cellular Operators Association of India), AUSPI (Association of Unified Telecom Service Providers of India. Publications like "Telecom Watch", Published Financial Reports on Respective operator’s website and other sources from Telecom Industry.

The findings of the study reveal that the Bharti Airtel’s collaboration with ERICSON, NSN & IBM has drawn an IT roadmap with a state-of-the-art infrastructure to support its existing and new business operations. The result is a strategic, on demand, scalable business transformation agreement capable of diligently servicing the needs of millions of customers. With proper governance framework, implementation and monitoring core processes can be outsourced without hampering the sustainability of the business.


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