A new business model with outsourcing: Etisalat case study

February 25, 2012: The former telecommunication monopoly, Etisalat has come up with a new plan to reduce cost as the profit of the operator is falling. The plan is to outsource their maintenance and support services.

Recently Etisalat had decided to shut down its operations in India following the Supreme Court order cancelling the 2G spectrum licenses. The company is said to transfer some of its employees to the service providers offering outsourced services. The company is expected to complete the outsourcing plan in a period of two years. Meanwhile the company will enter into contract with various international and local specialized service providers to perform regular maintenance on the company’s networks.

Once the support services are outsourced, the company will concentrate on its core business functions to accomplish certain strategic objectives which include improving the quality of customer care, increasing productivity, and improving the financial performance of the company but cutting operating cost.

Partnering with outsourcing service providers will help Etisalat to make use of advanced technology and international expertise from service providers who are specialized in the area, to reduce the time to the market and to improve the quality of service offered and customer experience.

According to the Nasser Bin Obood, Acting Chief Executive Officer of Etisalat, outsourcing plan is the next phase in the business model and said that it will be implemented in due course of time and will be completed within a period of two years. He also added that some of the employees will be transferred to new work centers in the company. He noted that the UAE citizens will not be left out during the implementation of the plan and will be accommodated with the service providers.

Mr. Obood also said that the implementation of the model will help the company to divert their time, effort and other resources to accomplish their main objective of delivering high quality service which are technologically advanced to the customers. This is during a time when the market is becoming highly competitive and there is decline in the revenue of the telecom players across the globe.

The annual profit of the company has declined by 24 per cent to reach USD 1.6 billion in 2011. The decline has been observed for a period of seven out of the last eight quarters as the revenue from foreign markets has declined. The decline in revenue from domestic market is as a result of competition from du, and the use of VoIP by customers.

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