New Delhi: Phone firm Bharti Airtel Ltd plans to outsource more of its internal functions as it enters businesses such as direct-to-home, or DTH, and Internet-delivered television services, chief executive Manoj Kohli said. India’s largest mobile-phone firm by subscribers first outsourced network and tech management four years ago in an attempt to cut costs and focus on adding customers.
The company, which has 75 million mobile and fixed-line phone customers, is adding three million subscribers a month even as it diversifies into DTH and so-called Internet protocol TV, or IPTV, services. The challenge is to manage scale while keeping costs low, Kohli said.
Video Story: In conversation with Manoj Kohli
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“We have innovated in these years and you will see we will innovate in the next two-three years a more unique model,” Kohli said in his first interview since becoming managing director and CEO on 8 August.
Bharti Airtel aims to become an integrated telecom firm that would rank among the world’s top three by customers—behind only China Mobile Ltd and China Unicom Ltd.
The company has benefited from its 2004 decision to outsource management of phone and information technology (IT) networks to the likes of Telefon AB LM Ericsson, Nokia Oyj, International Business Machines Corp. and Oracle Corp., and back-office support firms in India, by increasing its customer base more than 20-fold. Others such as Vodafone Essar Ltd and Idea Cellular Ltd have since outsourced these functions too.
Kohli declined to say which other functions it would outsource, but one analyst said they may be connected to human resource, or HR, management and billing. Bharti Airtel employs some 24,000 and outsources work to an equal number working with its vendors.
“The company can look at outsourcing HR functions, prepaid and postpaid billing. One of the other areas that can happen is when number portability is introduced, where more sophisticated work like customer churn management and behavioural analytics is outsourced to predict the longevity of the customer,” said Alok Shende, principal consultant at Accendia Consulting. “When they started outsourcing, they (Bharti Airtel) were in a lower level of learning cycle; now the company is little more advanced.”
Number portability allows users to retain their mobile phone numbers even when switching operators.
Bharti Airtel has over the last year put management structures in place for shared services such as HR, supplies, finance and IT that serve different businesses. Kohli said these units are helping reduce costs and decision times.
Ringing in change: Manoj Kohli, chief executive of Bharti Airtel. (Bloomberg)
The company will invest in strengthening its phone and IT networks, billing systems and call centres that service customers on the phone. “These are vital elements for the customer, on how we respond, on (how) fast we resolve the issue, what kind of redundancy we have, what kind of disaster recovery,” Kohli said.
A fire at one of the firm’s phone exchanges in Mumbai last month disrupted services for 12 hours. The services resumed with some of Bharti Airtel’s calls being routed over rival Vodafone Essar networks.
Kohli said Bharti Airtel’s transformation was aimed at making the company’s Airtel brand the most admired in India by 2010, an ambition the firm has nursed since 2005. The goal is being buttressed by rapid business growth, Kohli said. “On the growth side, mobile will remain the core business of this company and we will try and enhance and strengthen the market leadership, which is happening,” he said. Some two-thirds of the company’s business comes from mobile phone services. The company posted Rs27,012 crore of revenue in fiscal 2008.
Bharti Airtel, like rivals, is focused on expanding services into the villages where about two-thirds of the country’s 1.1 billion people live.
Kohli said the untapped rural market and the so-called third generation, or 3G services, which enable high speed data transfers, present a potentially huge opportunity for Bharti Airtel, India’s third biggest company by market value. 3G will also form the backbone of the company’s wireless broadband strategy.
Kohli said DTH and IPTV services would reinforce the appeal of the Airtel brand. “We are getting ready; trials are in advanced stages… Our content plans are ready,” he said.
A management expert said Bharti Airtel’s aim of becoming an integrated telecom firm was an obvious ambition to pursue, but could trip on technology and HR issues.
“The same billing system that records (voice) calls cannot do the same for data records, as they are technologically different,” said Romal Shetty, director of telecom risk assessment services at consultant KPMG India. “There will have to be some tweaking of applications. There will also be some people challenges to integration, as there can be rationalization of work.”