Telcos to spend an extra E9bn on outsourcing

The top 40 telcos in Europe are increasingly likely to outsource functions but there are stark splits between incumbents and alternative providers.

The telco outsourcing market will be worth an extra E9bn over the next few years as operators look to farm out functions such as billing, infrastructure installation and even network management.

However, the authors of the latest study, Booz Allen Hamilton, note several major splits between national telco incumbents and newer fixed line, mobile, cable and ISP competitors - what it calls the Challengers.

While the biggest reason for outsourcing - cited by 35 per cent of all respondents - remains cost reduction, when it comes to the core activities of network management and billing 90 per cent of Challengers are considering outsourcing. However, 75 per cent of incumbents said they are not.

In some areas, there is clearly a big difference between the two types of operator because some alternative carriers and mobile operators were set up from day one concentrating more on marketing and customer service as opposed to the nuts and bolts of network technology. They may have never known what it is like to have certain functions in house.

The management consultancy predicts the two next phases of outsourcing in telecoms. First, those telcos that have not done so will outsource desktop support, financial administration systems, payroll and support services such as logistics and invoice printing.

Then come call centres, or parts thereof, application-independent machine operations, and parts of applications related to ERP systems and data warehouses.