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Case 5 – Strategic Outsourcing at Bharti Airtel Limited
1. Do you think Bharti should enter the outsourcing agreements outlined by Gupta? What do you see as advantages and disadvantages of such agreements?
In my opinion, Bharti should go ahead with its outsourcing agreements outline by Gupta.
There are advantages and disadvantages of delegating its telecommunications and IT networks to vendors. First of all, Indian market for Telecom is growing exponentially. In 1989, there were
4.2 million telephone subscribers. By 2003, the number was 54 million. Thus, outsourcing would help Bharti to full capitalize the astounding growth surge. It can use its resources and expertise to only focus on core areas of value-added services, marketing, branding and pricing, and leave the rest to expert vendors. Second, as one of Applegate’s benefits of “incremental outsourcing”,
Bharti would reduce its deliver time to market by outsourcing (Applegate, 287). New network set up in a circle takes at least 6 months from planning to operating. Using its vendors’ technology and expertise, new products would be developed faster and the time would be reduced to get the product or service to the end users. Third, Bharti would receive favorable cash flow profiles and cost reduction from outsourcing, according to Applegate (288). The company would transfer equipment investment risk to vendors. It does not have to keep the investment in maintaining excess capacity. Vendors can archive economy of scale, and pass on the benefits to Bharti. The company also does not need to pay the vendors before their service. Lastly, Human Resource issue could be resolved. Bharti can avoid the problem of hunting for manpower required as part of expanding business. Its employees could have opportunities to acquire knowledge from industry leaders by transferring to vendors.

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