Eric Goodness

Sprint’s planned reduction in force of 8000 workers, including chief network officer Kathy Walker, is a sure sign that the company must seek outsourcers to maintain operations. 

Outsourcing has been an accursed concept with carriers because the network is a core competency to the business. However, many would rightly argue that Sprint’s core competency should be customer acquisition. 

Change has slowly been creeping across the continents to the North American service providers.  Asia Pacific, Latin American and African operators have been the first adopters to outsource some carrier operations.  Companies such as Ericsson, Motorola, Alcatel-Lucent, Tech Mahindra and Dimension Data have made significant in-roads to become outsourcers of choice. 

To date, many of the outsourcing agreements with carriers are fairly simple instruments focused on multivendor maintenance of systems and staff augmentation in operations centers.  As more fixed and mobile providers look to become ‘acquirers of customers’ – business and consumer - instead of ’operators of networks’ the structure of these agreements will change more rapidly. 

My bet is that scope of most new agreements will not change too drastically too soon.  In fact, they will likely be band-aid approaches for cost reduction and avoidance.  Looking to third party services companies to help the carriers manage and operate networks more efficiently will be enough for most organizations.  There are certainly existing arrangements in the market that do incent outsourcers based on the success of new service creation initiatives; however, the operators generally still own the infrastructure and bear most of the risks. 

The market to outsource carrier operations will begin to kick into hypercompetitiveness in 2009 as many Enterprise outsourcers look to supplement underperforming Enterprise pipelines with new carrier-centric opportunities.  The main battle will be waged by the service organizations of manufacturers (e.g. Ericsson, Nortel, Motorola, Alcatel-Lucent), legacy outsourcers (e.g. IBM, CapGemini and EDS) and a hungry contingent of Offshore service providers (e.g. TCS, Wipro, Tech Mahindra).  Smaller, niche companies (e.g. Telent, ThruPoint, EFI Telecom) will be relegated to staff-augmentation roles.

This new wave of carrier outsourcing requirements just might coax Cisco from behind its curtain of clandestine operations to compete openly in a Services market without polarizing its legion of Enterprise focused partners.  The Cisco Advanced Services business unit already provides direct consulting and integration services to the carriers and Cisco is already managing Communications-as-a-Service platforms for carrier partners.

Anyway, this market is going to heat up fast and be very interesting.  I’d like to hear what the network IT services community sees happening.