The perceived benefits and challenges of mobile network outsourcing in South Africa.
Date
2014-08-01
Authors
Baumann, Lixiang
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Abstract
Abstract
Telecom operators today are seeking new ways to achieve greater efficiency and
streamline their cost structures. Outsourcing has become one of the strategic
means of optimising an organisation’s cost structure, improving performance,
obtaining benefits through economics of scale, as well as gaining a faster time to
market. Although outsourcing can be of great economic benefit, managing an
outsourcing contract can be very challenging in the complex mobile network
environment. This research aims to explore the perceived benefits gained and
challenges faced by the South African Mobile Network Operators (“MNOs”)
through outsourcing their network rollout, network Operations and Management
(“O&M”) and network maintenance as a network-managed service to the
infrastructure equipment vendors in the South African context.
The research concludes with the following findings in terms of perceived benefits
to be gained by the MNOs though network outsourcing:
1) The outsourcing option appears to be an unavoidable choice for most South
African MNOs due to a lack of in-house skilled resources;
2) In the MNOs’ view, outsourcing is, in some cases, more expensive compared
to in-sourcing or carrying out the activities in-house. The challenge of
quantifying cost-saving remains a concern for MNOs when considering
outsourcing network-managed services to vendors;
3) MNOs acknowledge that outsourcing enables them to benefit from the
economics of scales through vendors’ vast technical skilled resources, latest
technologies and products, as well as rich experience in network management.
However, losing the core technical skilled resources remains a concerning
factor leading to reluctance on the part of South African MNOs to conduct the
outsourcing of large-scale network-managed services;
4) A high unemployment rate and complicated labour regulations put South
African MNOs into a dilemma between wanting to obtain economic benefits
through outsourcing versus losing local employment. This creates
complications for MNOs, who are consistently seeking the means to create a
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lean organisational structure while simultaneously being under pressure from
the government to prevent losing further employment in the country.
In terms of challenges faced by the MNOs, the research finds the following:
1) The complex scope of work in telecom mobile network outsourcing contracts
creates challenges in managing the outsource contracts.
2) Changing the mind-set of ‘letting go’ requires high commitment from operators.
Changing the operators’ technology-centric work force into a contractor
management-centric work force requires transformation within the operators.
3) Lengthy contract negotiation and complicated project implementation in the
industry typically slows down progress and hence jeopardizes the achievement
of business objectives when outsourcing.
4) Finally, there are numerous challenges in dealing with various vendors relating
to the maturity of the vendors’ experience in managing a network-managed
services contract.
Description
MBA 2014
Keywords
Mobile communication systems,Telecommunication,Contracting out