Don't have a login yet?
Sign up now
22 October 2012
| Guy Matthews
Telecommunications is not the only sector where outsourcing is a vital weapon in a tough competitive landscape. What other industries are showing carriers the way forward in the outsourcing space?
Carriers have long realised the
dividends of outsourcing non-core business processes to other
parties in order to focus on what they do best.
They will sometimes look for partnerships with other carriers
to achieve this, sometimes to specialists outside the industry
with niche expertise that would make no sense for the carrier
to acquire for themselves. Few telcos run their own payroll
function, for example.
Most carriers would flatter themselves that the management and
meeting of customer expectations is an area they are adept at
administering themselves, or at any rate one where they are
already outsourcing to best effect.
Not always so, believes Jonathan Wright, VP service provider
with European network operator Interoute: "There are many other
verticals out there where outsourcing is prevalent that have
much better control over the customer and over satisfying those
customers’ needs," he claims. "Telecoms is
probably at least five years behind these industries and has a
lot of catching up to do."
The truly intelligent and dynamic
analysis of customer data, as near to real time as possible, is
certainly in its relative infancy in telecoms, whereas other
sectors, like retail and financial services, have successfully
been seeking partnerships to achieve this for many years.
Both banks and retailers generate, as a by-product of their
mainstream operations, a torrent of rich transactional data.
Many have turned to outside experts to apply algorithms to that
data that can, for example, be tuned to spot unusual customer
By breaking data into threads, data management specialists can
identify patterns of activity that might either suggest
criminal activity in progress, or perhaps just changing
customer habits – information that then can be
In a similar way, a telecoms carrier or service provider might
be able to identify unusual traffic patterns and respond to
them more quickly than rivals, creating competitive advantage
they could never realise on their own.
Although carriers retain vast quantities of customer data, they
are often blind to its significance because they do not keep
in-house the ability to store it dynamically. By outsourcing
the analysis of that data to the right partner, one for which
data is its sole business, that information can be split
between tiers and examined for its predictive
Proper analysis of data can also be used to shorten the time
lag when developing new products and services to respond to
changing customer requirements. No longer need it take months
for a new service to emerge. The right partner, such as a bank
might use to help launch a new mortgage offer, can reduce this
lag to weeks or even days. In a particularly fast moving area
of the communications industry, such as mobile telephony,
sophisticated analysis of data can help to blend the most
appealing mix of content or the right roaming deal.
Retailers use data analysis expertise not just to look for
meaning in already harvested data, but to look into the future
and anticipate the next wave of customer behaviour. They can do
this by looking across hundreds of different brands and product
lines and converging that information onto a single database.
Online retailers in particular have become skilled at spotting
consumer trends almost before the consumer themselves knows
what they want.
Carriers may well be mindful of the
superior data agility of new types of rival, for example
'over-the-top’ service providers such as Skype and
Google. Do these players have lessons for the traditional
carriers? Have they developed customer relationship management
techniques that telcos might do well to invest in?
The right partner might help the traditional carrier to exploit
strengths that the OTTs don’t possess. An old
school telco probably has closer dialogue with the customer
than a Skype, and will certainly have value embedded in their
network assets that an infrastructure-lite rival
Other types of rival, like utility companies breaking into the
communications market, are already using partners to develop
new ways of managing infrastructure cost effectively that
telcos could potentially copy.
So-called smart grid technology is used by energy companies, as
well as those in oil and gas exploration, to automatically
evaluate events across their real estate in near real time.
They are deploying software to look for patterns and foresee
unwanted events. Communications network operators too could
predict network failures before they occur, by leveraging
Alam Gill, SVP for international
managed services at CSG International, an outsourcing company
that works with many well know carrier names, says that not
only are there many other sectors that are more outsourced than
telecoms, they are less dependent on creating new solutions to
problems for which a solution already exists.
"There’s a history of carriers building and owning
their own solutions whereas, say, financial services looks at a
more generic architecture, less bespoked than in telecoms," he
says. "Telcos have their own people manage things, while
outsourcing the odd component."
He says this can cause issues when telcos want to roll out
something new like LTE: "Some are finding it pays to use more
outsourcing to help with that," he says. "There’s
no one sector that knows how to break into new service areas
perfectly, but if you do want to be global about it then it
does pay to take a generic global approach. Telcos have global
branding, but behind the scenes still operate individual stacks
There are of course other vertical sectors which have a
demonstrable lead over telecoms in outsourcing, but in a way
that telcos cannot necessarily emulate with ease.
The car industry is probably the most sophisticated user of
outsourcing in the world, and has been very successful at it
for a number of years, believes Andreas Hipp, CEO of global
carrier’s carrier Epsilon: "It’s all
about the manufacturing process which in turn is all about
components," he says. Telecoms on the other hand is a lot more
fast changing, and is about services not components."
Every customer wants a telecoms service that’s a
little bit different to the next customer, in a way that a
production line approach can’t help with, he
believes: "Yes, telecoms can develop in its use of outsourcing,
but it should be careful about trying too much too quickly," he
"One reason is that some areas of telecoms have low barriers to
entry. You can suddenly get dozens of new competitors in a
market area, only some of which know what they are doing but
all of which can put pressure on pricing. This can make it
difficult to formulate an outsourcing strategy. In car
manufacturing, you can predict more easily how the market will
behave and outsource accordingly."
Andreas Kederer, director of product management for managed
services with Colt, says if you want to see outsourcing raise
to a fine art, then you need to look at how outsourcers do it
themselves: "It’s interesting to see how systems
integrators and consulting firms handle the outsourcing of
business processes," he says. "They are looking to do so on a
shorter and shorter cycle. Perhaps telecoms is less amenable to
this greater flexibility because of its far larger asset
Each vertical will have unique requirements and adoption rates
when it comes to outsourcing, just as we are seeing different
adoption rates in other areas like cloud and infrastructure as
a service (IaaS).
Each sector sees different value, even in the same sort of
solution. But helping to understand where value has been
achieved by others could well add important clarity to the next
wave of telecoms outsourcing.
How telecoms companies are influencing the outsourcing
strategy of other industries
If there’s much that telcos can learn from other
sectors, are there not lessons that others can take from areas
that have been pioneered by the communications industry?
Finance, education and healthcare are all verticals with needs
that overlap with those of telecoms, and where telecoms
companies with a managed services offer are already finding a
ready audience in areas like the management of widely networked
and distributed operations, says Mary Stanhope, vice president
of marketing with Global Capacity, which operates an automated
exchange platform for telecoms service providers: "All three of
these verticals put a premium on high capacity and throughput,
reliability, quality of service, security and value
communications as a core part of their overall success," she
says, values where she believes carriers have a considerable
Len Padilla, NTT Europe’s senior director of
technology, says he is seeing many verticals where companies
are taking advantage of pioneering developments in the
deployment of on-demand solutions as shown by communications
service providers. He believes they can copy the economies of
scale that cloud offers to develop new commercial models for
themselves, with help from telco partners.
"We’ve got a customer in the airline industry," he
explains. "Their IT management was having a tough time
explaining the benefits of taking business online to other
C-level executives. We helped them answer the questions those
"We identified a new commercial model where they could split
their ticketing operation into two. One side was the static
side of the business where costs are broadly always in line
with benefits. The other is what you might call the more
dynamic side of the business, the less predictable side of
He said NTT Europe leveraged its own experience to suggest they
put the more dynamic side of the business in the cloud, opening
the door to a more interesting, and a more controllable,
commercial model: "In this way you can, as a middle sized
enterprise, start to enjoy some of the benefits that used to be
the preserve of the very biggest organisations," he