To outsource or not to outsource, that is one of the most difficult questions for an operator.

Vendors rarely consider this for in their view the need is absolute and usually independent of track record for the sales team have little contact or accountability to the delivery team. But from the vendors perspective, is the proposed managed service something which he has the capacity to excel at? As for an operator, the question is, is the managed service actually something which he wants and needs? There is a very real risk of weve got one too setting in here, for example look at the number of GNOCs being set up in countries where other businesses are removing them. Perhaps not so much for failure to perform but cultural issues making it difficult for the Call Service Agents to handle the calls. There is only one reason for outsourcing which is that; through the vendors skill and innovation the service can be delivered more efficiently than by the Operator. This may manifest itself as reduced operating costs, bundled pricing with an equipment overlay potentially saves capitol and capex, Head count reduction, speed to market faster, and so on. In the modern telco environment there is no place for any other motive; furthermore organisations on both sides of the fence are set for failure if they ignore that. In the long term it would have been better not to venture into it. There are several types of vendor client relationship. The first is a national operator, the so called island network. The second is the multi-national, where for example a parent operator holds a controlling interest in networks from several countries. It is essential also to consider the vendor, does the vendor have an, in country, presence already? If the vendor doesnt what are the reasons for approaching the client, is it for example a strategic move to allow the vendor entry to that particular market? If the scope is NOC operations only can the margin really justify the outsourcing? In most managed service cases the vendor inherits the labor force from the operator, that in itself is a painful exercise. Staff settled in their positions are bound to be wary of a plan to migrate them to another organization. If the vendor is going to show an outsourcing dividend how is he going to derive that saving?

If it is NOC operations only and that is to be hosted offshore at the vendors GNOC then it is unlikely that a significant percentage of the operators staff will be migrated. So the operator is facing the severance of close to 100 percent of the staff who fall under this plan. Reducing labor rates will be un-popular and we have seen attrition rates as high as 100% per annum. What does that do? It leaves the vendor facing the loss of his workforce, he is forced either to retract the pay reduction or ship in his own staff to replace those lost. By definition that is going to be more expensive thus blowing the managed service budget clean out of the water. So we realize that simply mirroring the client organization has the potential to increase cost not reduce it, what are we going to do? We must accept that a truly mutually beneficial managed service must require the hosting of multiple networks from one country. That way not only can the GNOC deliver but the SPM and FLM organisations can also come under the remit of the MS. In fact that is the quickest way to show performance improvement through the reorganization of the FLM and SPM teams. The main reason for setting up the first managed service project in a country is to use it as a springboard to bring other networks from the same country on board. Operators need to make a quantum leap, managed service is not about off loading the bits of the organization that are difficult to manage, they dont like or are costly. managed service is about the skillful delivery of a raft of measures which coordinated; deliver the same or better service at eventually a lower cost. We have to say eventually as it becomes obvious that lower cost is the objective not the immediate result. One fundamental question remains; why should a multi-national operator outsource? Consider an operator headquartered in Quatar, with operations in the stans of the old Soviet union, Laos, Thailand, Bolivia, Fiji, etc. By outsourcing this network he is handing over its operations to a third party, a third party who in order to stay in business must make a profit. So why not reverse the trend but in a smart way? Let this operator build his own GNOCs, two for example one in Bangkok and another in Bolivia. With diversity redundancy that can support the all the networks within the remit. In other words in a very real sense the operator can become his own outsourcing partner here drawing most of the benefit that the vendor can offer. But critically with out paying

the 3rd partys margin. There is an immediate value add which even the most aggressive vendor cannot deny. If he does the fallaciousness is evident and a Red flag to the operator. In this scenario the only value benefit the third party vendor can offer is when he is hosting multiple vendors across a substantial spread of the countries in which the operator actually operates. What this all comes down to is a simple perspective - only outsource if it is going to be done well where the economics permit the delivery and offer a margin.