Moving From Outsourcing 2.0 to 3.0

Since 2002, the journey has been of creating some very innovative
outsourcing models and Bharti felt the need of how to build business
and and core competencies. In 2005, we started getting into the
business of offering managed services and outsourcing models to our
customers. The large domains we look at is network deployment and BPO.
Simultaneously, network outsourcing journey began in 2004 and BPO
journey began in 2005. We have done some very large ground breaking
innovations. The key abstracts that we have derived include three
fundamental steps also which we call as Outsourcing 2.0. The first step
is macro -abstraction, the second being creating an outcome core
relation model, and the third being organizational transformational
model. If we start adoption these three principals and building
blocks you can create Outsourcing 2.0 kind of model. We
started with macro-abstraction. The whole idea is not to take
pieces or components of the task that needs to be outsourced but to
look at it on a comprehensive end to end basis. How do you
create a model which is future proof.



A lot of innovation happened around macro abstraction and defining a
scope that can stand the test of time. The way you can define scope
helps define exciting models that you can give to your partners. We did
the same thing with network. We took the BPO elements, whether welcome
calling, complain calling, or query calling that surround our
customers. So macro abstraction is an important step that allows you to
create and define scope in a very innovative and future-proof manner.



In the outcome relation model is the question – What is the
cost of getting this job done. It turns out that if you relate your
cost of outsourcing to some relevant business parameter then you are
directly drawing the analogy/alignment between an IT investment and a
business outcome. For eg. at Bharti, when we took all of our IT
outsourcing we aligned that with our revenue. The percentage of the
revenue is what will be given to the outsourcing partner. When we did
that we created a very exciting alignment, both partners IBM and Airtel
were aligned to ensure revenue growth. We said the portfolio is large
enough and got all hardware/software services. We are running over 3500
servers and 3500 TB of data and 16 Gb of bandwidth. For running
something like this all of that put together in this macro abstracted
scope is linked to revenue. We crossed more than five years and a
number of telecom companies have picked up this model.  When
we did out outsourcing of our network we chose a parameter called
erlang which is a unit of network consumption voice units. We were not
worried about the boxes whether a base station, MSE.  



We have taken all the large macro abstraction and correlated that with
the business outcome revenue, call, erlang of traffic etc. The way it
makes sense for both partners and Bharti is to do this on a long term
basis rather than a short term basis. Because of outcome correlation we
don't worry of RoIT (Return on IT).



The last and one of the most important step in outsourcing is complete
outsourcing transformations.We cannot treat the outsourcing partner as
them and us and cannot treat them as a vendor or a consumer. What is
needed to be done is to create a community of practice. A community of
practice is a virtual organization structure that includes Bharti
Airtel employees and employees from partner companies such as IBM,
Wipro, or Nortel, Ericsson, Nokia, Teleperformance, AT&T etc.
We have a large ecosystem of partners to whom we have outsourced. In
each of these domains the organization is built in a manner so that
everybody feels as part of the same organization. We cal that a
community of  practice rather than calling it a hardline
organization which brings people together.

The leadership teams across the companies in the IT space need to come
together for which we have created an organizational leadership model
called Phoenix. This model of leadership alignment  makes a
huge amount of difference in terms of trust, transparency, and open
dialogs, since it is impossible to predict the future, write everything
in the contract in letter. The way to go about it is to build
leadership alignment and a good bit of governance as well. Then we
realized that if we can build these models in our company why don't we
offer it as our services, and we started such offers. For small and
medium businesses, we are now taking SaaS and embedding it an overall
cloud computing paradigm. Looking at the entire life cycle that
surrounds the customers, to provide not only the technology but
complete end to end experience of provisioning, building, customer
care, solution of the business proposition and offering it as a managed
service. We started doing the same for large enterprises that is more
closer to network layers, collaboration tools and data center managed
services.



India is clearly demonstrating that outsourcing is not only about job
coming to India and not about cost arbitrage alone. Outsourcing 2.0 is
fundamentally a business model innovation. 2.0 fundamentally means that
large enterprises are adopting outsourcing models that are business
outcome oriented. This business outcome oriented models built on macro
abstraction scope coupled with a very tight organizational
transformation methodology is a new innovation which ripples and
emanates from India and going to other parts of the world.
Simultaneously, there are managed services that are being
offered  in marketplace that are built with a service provider
mentality and not technology mentality, which means entire customer
life cycle is handled in the entire process.



Partner selection should be based on two simple criteria. One is
competency which is obvious and the second being DNA. It is important
to check the partners' flexibility. It is easy to determine competency
but difficulty to ascertain DNA. We can test the DNA by ensuring that
an appropriate interlock can fire across all levels of the
organization. All levels of organization need to perform well. When it
comes to fiscal model generation, first and simple principle is to
create own LTFP (long term financial plan). That plan and modeling must
be built very well ,and there is a good bit of financial engineering.
Next comes the sensitivity analysis. What are the outcome parameters
you are going to play with? The good news is that it requires a lot of
upfront work but once it is done you do not have to touch it. The bad
news is that there is really no 'one size fits all'.  The
excitement about 2.0 is that it is not about using standard models. You
have to discover it and find it for yourselves. There is tons of
experience in India and across various industries and this model really
works.      



With innovation, one needs to be bold and strong in conviction. The
entrepreneurial spirit at Bharti has been extremely strong. You need to
make logical cases. There is a lot of work to be done with various
stakeholders and promoters. The fact is that this concept is proven and
is being replicated where few others are picking up not only in one
industry but across industries and geographies. Outsourcing 2.0 is not
the end of the story. There will be Outsourcing 3.0 and will be new
paradigms that will kick in. We are constantly re-innovating and
re-thinking how the whole business model has to come in. In a nutshell
it is a business model innovation for which one has to constantly think
through customers, prices, costs, margins, sensitivity, core
competencies and what your brand wants to stand for. It is a fairly
involved exercise. Boldness is not only from our part but also from our
partners.