Telecom Outsourcing In Asia

Outsourcing of technology or business operations by telecom companies  is an area which has recently been in the headlines.  One of the reason for this trend is the popularity of managed services trends. Telecom outsourcing has a huge potential for Pakistani technology industry as well. Currently there is no large IT company in Pakistan which competes globally for telecom outsourcing projects. Here are some of the recent mega deals in South Asia which have made global headlines:

IBM – Bharti 

Tech Mahindra – British Telecom

As noted by Analysys Research, IT vendors such as IBM and HP are building on their IT solutions and equipment businesses to capture outsourcing deals in the enterprise telecom space. They have been working hard to develop strong service offerings and, in some cases, have even set up telecom practices within their service divisions. The illustration below from Analysys shows how telecom companies are positioned in the outsourcing chain. Note that in this post I am focussing only on the outsourcing BY telecom firms and not any work which is outsourced TO telecom firms.

In Pakistan most of the telecom technology solution deals seem to be happening with foreign technology product and solution providers – at least that is the impression one gets from the press releases and the media articles. Si3 is a notable company – it has offered payment solutions to many telecom providers in Pakistan. I do not know if Pakistani companies such as Techlogix, NetSol, TRG etc. serve the telecom vertical but I’m sure there must be other outsourcing (Technical, BPO or otherwise such as HR services)  from Pakistani IT companies. However one thing is clear: the scale of such business seems to be on the small side or the work is limited to certain hot areas such as call centers. Is this another sign that Pakistan lags behind in depth of skills and technical resources needed for larger telecom outsourcing deals?

Of course we cannot compare directly with giants like Tech Mahindra in India (see below) but there is room for improvement. Here’s a relevant article from The Times of India.

The phenomenal growth in telecom, combined with severe competition and cost pressures and rising customer expectations, is driving a slew of huge outsourcing deals in the sector.

The telecom outsourcing story started with the Bharti-IBM deal and then the Idea-IBM one. Now, analysts and industry expect several more similar 10 or seven year deals to conclude soon. Hutchison (Vodafone) Essar is said to be looking for an outsourcing partner. The market speculation is that it could once again be IBM, in a deal worth $1.6 billion. Reliance Infocomm is said to be in talks with companies like Accenture and EDS for a $1.5 billion outsourcing contract. Sources say Aircel is also in talks for a large deal.

About three years ago, Bharti Tele-Ventures had signed a 10-year contract worth $750 million to outsource its entire IT infrastructure to IBM. Idea Cellular followed, a few months ago, with a $800 million deal with IBM for consolidating and managing its IT infrastructure and applications.