RCom Signs Outsourcing Deal Worth $ 1 Billion With Ericsson

by Paul Joseph on February 13, 2013 · 0 comments

To rein in the expensive Indian Operations, Reliance Communications ( RCom ) has signed a massive US$ 1 Billion outsourcing deal with network equipment manufacturing & management company Ericsson . Ericsson will henceforth look after RCom’s wire-line and wireless networks of northern and western states for eight years. In other words, RCom’s entire plethora of operations including mobile networks, cell-towers & other service arrangements will come under the direct purview of Ericsson.  However, what’s noteworthy is the fact that about 5000 employees who were hereto on Reliance’s payroll will shift under the new management. Additional 4000 employees will shift under Alcatel Lucent, as a part of a similar deal signed last month. Through this deal RCom has handed over the responsibility of southern and eastern states for the same time-frame. Jointly, the two companies will now effectively manage the entire infrastructure & network responsibilities of RCom’s complete Indian Operations.  RCom has thus just handed over 9000 employees to these companies. That’s about 12-15% of the entire workforce RCom now commands. Why such a fundamental & deep impact decision? The telecom business is a very tough one especially if you are operating in India. Thanks to the geography & varying landscape telecom companies have to invest a lot in laying down infrastructure like cables, cellular towers, junctions & such. But the margins due to competition are very slim. If these conditions are not serious enough, telcos are routinely accosted by policy changes & auctions that erode whatever margins are left. Especially in case of RCom we had recently witnessed the tough times it was going through. It was almost ready to sell-off it cell-tower business. By this outsourcing deal, RCom can hope to bring operational efficiency to its Pan-India Operations & by segregating the same to two different companies, performance metrics can be easily measured. Do you think RCom’s decision will offer the company sustainable profitability in the long run? Image Courtesy |   profit.ndtv Looking For A Social Media Agency?? – Contact WATConsult – India’s Leading Social Media Agency

[via WATBlog.com – Web, Advertising and Technology Blog in India]

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