Harvard Case - Strategic Outsourcing at Bharti Airtel Ltd.
"Strategic Outsourcing at Bharti Airtel Ltd." Harvard business case study is written by F. Asis Martinez-Jerez, V.G. Narayanan, Michele Jurgens. It deals with the challenges in the field of Strategy. The case study is 21 page(s) long and it was first published on : Jul 12, 2006
At Fern Fort University, we recommend that Bharti Airtel Ltd. adopt a strategic outsourcing approach that focuses on core competencies, leverages technology and analytics, and fosters innovation to drive growth and maintain a sustainable competitive advantage in the evolving telecommunications landscape. This strategy should prioritize digital transformation, strategic alliances, and globalization strategies to navigate the competitive landscape and capitalize on emerging opportunities.
2. Background
Bharti Airtel Ltd. is a leading telecommunications company in India, with a significant presence in emerging markets. The case study highlights the company's decision to outsource non-core functions like network operations and customer care to focus on its core competencies of network infrastructure and service innovation. This decision was driven by a need to improve efficiency, reduce costs, and enhance agility in a rapidly changing industry.
The main protagonists of the case study are Sunil Mittal, the founder and chairman of Bharti Airtel, and the company's senior management team, who are grappling with the challenges of navigating a competitive and evolving industry while maintaining profitability and growth.
3. Analysis of the Case Study
Using Porter's Five Forces framework:
- Threat of New Entrants: High due to the low barriers to entry in the telecommunications industry, especially with the rise of new technologies like Voice over Internet Protocol (VoIP).
- Bargaining Power of Buyers: Moderate, as customers have multiple options for telecommunications services, but switching costs can be high.
- Bargaining Power of Suppliers: Moderate, as the industry relies on a limited number of equipment suppliers.
- Threat of Substitute Products: High, with the emergence of alternative communication channels like messaging apps and video conferencing.
- Competitive Rivalry: Intense, with numerous players vying for market share and customers.
Applying the Value Chain analysis:
- Primary Activities: Network infrastructure, service provisioning, customer care, marketing, and sales.
- Support Activities: Technology development, human resource management, finance, and legal.
The case study emphasizes the importance of outsourcing non-core activities to enhance efficiency and focus on core competencies. This aligns with the resource-based view of strategy, which emphasizes leveraging unique resources and capabilities to achieve competitive advantage.
Analyzing the competitive landscape:
- Competitive advantage: Bharti Airtel's competitive advantage lies in its strong brand recognition, extensive network infrastructure, and a focus on innovation in emerging markets.
- Strategic positioning: The company aims to be a leading provider of telecommunications services, offering a wide range of products and services to cater to different customer segments.
- Strategic groups: Bharti Airtel competes with other major telecom players in India and emerging markets, including Reliance Jio and Vodafone Idea.
Identifying key challenges:
- Maintaining profitability: The industry is characterized by intense competition and price pressure, making it challenging to maintain profitability.
- Adapting to technological advancements: The rapid pace of technological change requires constant innovation and investment to stay competitive.
- Managing a global workforce: Outsourcing and globalization strategies require careful management of diverse teams and cultures.
4. Recommendations
- Strategic Outsourcing: Continue to strategically outsource non-core functions like network operations and customer care to focus on core competencies of network infrastructure and service innovation. This should be driven by a balanced scorecard approach, considering financial, customer, internal process, and learning and growth perspectives.
- Digital Transformation: Embrace digital transformation to enhance customer experience, improve operational efficiency, and develop innovative products and services. This includes leveraging AI and machine learning for data analysis, customer insights, and network optimization.
- Strategic Alliances: Form strategic alliances with technology companies, content providers, and other industry players to expand reach, access new technologies, and develop innovative solutions. This will enable business model innovation and drive growth.
- Globalization Strategies: Implement globalization strategies to leverage opportunities in emerging markets and diversify revenue streams. This includes exploring mergers and acquisitions and joint ventures to expand into new geographies.
- Innovation and Product Development: Invest in research and development to develop innovative products and services that meet evolving customer needs. This includes focusing on disruptive innovation to create new markets and disrupt existing ones.
- Corporate Social Responsibility: Implement a robust corporate social responsibility program to enhance brand image, build trust with stakeholders, and contribute to sustainable development.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations focus on strengthening Bharti Airtel's core competencies in network infrastructure and service innovation, aligning with its mission to provide high-quality telecommunications services.
- External customers and internal clients: The recommendations prioritize customer experience, employee engagement, and stakeholder value creation.
- Competitors: The recommendations address the competitive landscape by emphasizing innovation, digital transformation, and strategic alliances to stay ahead of the curve.
- Attractiveness ' quantitative measures: The recommendations are expected to improve profitability, enhance efficiency, and drive growth, based on industry trends and market analysis.
6. Conclusion
By adopting a strategic outsourcing approach, embracing digital transformation, forming strategic alliances, and implementing globalization strategies, Bharti Airtel can navigate the competitive landscape, capitalize on emerging opportunities, and achieve sustainable growth in the evolving telecommunications industry.
7. Discussion
Other alternatives not selected:
- Vertical integration: While vertical integration could provide greater control over the value chain, it may be too costly and time-consuming in a rapidly changing industry.
- Horizontal integration: Horizontal integration through acquisitions could lead to market dominance, but it may face regulatory hurdles and integration challenges.
Risks and key assumptions:
- Technology risk: Rapid technological advancements could render current investments obsolete, requiring constant adaptation and innovation.
- Competition risk: Intense competition from established players and new entrants could erode market share and profitability.
- Regulatory risk: Changing regulations and policies could impact business operations and profitability.
- Globalization risk: Expanding into new markets involves cultural, political, and economic risks.
8. Next Steps
- Develop a strategic outsourcing plan: Identify non-core functions to be outsourced, select suitable partners, and establish clear performance metrics.
- Implement digital transformation initiatives: Invest in technology infrastructure, develop digital skills within the workforce, and implement data-driven decision-making processes.
- Form strategic alliances: Identify potential partners, negotiate agreements, and integrate operations to achieve mutual benefits.
- Explore globalization opportunities: Conduct market research, identify potential target markets, and develop expansion strategies.
- Invest in innovation and product development: Establish dedicated R&D teams, allocate resources for innovation, and develop a pipeline of new products and services.
- Strengthen corporate social responsibility initiatives: Develop a comprehensive CSR strategy, align initiatives with business goals, and measure impact.
These steps should be implemented over a phased timeline, with clear milestones and accountability measures to ensure successful execution and achieve the desired outcomes.
Overall, Bharti Airtel has a strong foundation for success in the telecommunications industry. By embracing strategic outsourcing, digital transformation, and globalization strategies, the company can continue to thrive in the face of evolving challenges and opportunities.
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Case Description
Faced with exponential growth and a competitive telecom environment, Bharti looks for ways to better manage its capital expenditures for telecommunications and information technology. One option is to hand over management of its telecom and IT networks to its vendors. Explores the pros and cons of such an outsourcing arrangement for a company in an industry where technological superiority is considered an essential element in competitive strategy.
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