Bharti Airtel Analysis

Bharti Airtel is one of India’s largest telecommunications company providing mobile, wired line, and long distance services. A rapidly growing and expanding company in a highly competitive marketplace, Bharti is currently considering entering into a $400M information technology (IT) outsourcing agreement versus running their IT operations in-house. Bharti’s primary motivation for contemplating this outsourcing agreement is that they wish to focus on growing their market share and running their core business operations instead of focusing on IT acquisitions and operations.

Historically, Bharti has found itself having to constantly negotiate large, expensive IT equipment purchases to support its growing customer base. However, since Bharti cannot exactly forecast future capacity demand, they frequently end up buying unneeded capacity which wastes financial resources - or not purchasing enough capacity to meet demand which slows down growth and lowers customer satisfaction.

The primary question in this case is whether Bharti should even outsource its IT operations at all, and if so, how Bharti should structure their outsourcing agreement? One question is whether or not Bharti’s existing legacy applications will be supported going forward by the selected outsourcing vendor. Another concern is that approximately 1000 Bharti employees will need to be transferred to the selected vendor. Finally, there is the all-important decision of selecting a vendor.

Bharti’s core competencies lie in strategic vision and efficient operations. With regards to strategic vision, Bharti was not only the first mobile communications company in India, but has continued to succeed strategy wise, correctly making the right moves in their competitive marketplace and continuing to implement the innovative value-added services that their customers want. Secondly, Bharti is an excellent operations organization, providing affordable and reliable service to their customers, including those...