Bharti Airtel–Perfect example of outsourcing all its activities! But can it succeed in Africa?

Airtel is one of the most prominent telecom companies in the world with its services spanning 19 countries in South Asia and Africa. It has a number of firsts to its credit which has positioned it much ahead of its competitors. It’s bouquet of fixed – line services, mobile services and also broadband have positioned it in a league of its own.

These statistics are a pointer of its growing dominance over others –

• 140+ million subscribers as of July 2010 (Vodafone comes way behind at 111 million subscribers)
• World’s third largest single country operator and fifth largest telecom operator in the world
• First Indian telecom operator to achieve the Cisco Gold certification for good competency, service, support and customer satisfaction standards
• First mobile telephony company to outsource everything except marketing, sales and finance

It is the last point which made me thinking. This has turned out to be the reason for the wide gulf between the best and the rest.

This made me understand and analyse as to what Airtel really did.

Airtel outsourced their IT processes to IBM, entire network operations to Ericsson and Siemens along with Alcatel Lucent recently and the transmission towers to another company

So what did this initiative bring for them?

It reduced has their costs considerably and they were able to acquire more customers and were able to pass on these savings to the customers instead of the shareholders and this increased their customer base even more and they again followed this pattern

Airtel was also able to differentiate themselves easily from the rest in the market who were and have been in the RED for a long period of time. Being in a position where they reduced their costs considerably, they had the opportunity to control the market and introduce various initiatives without being majorly affected in terms of revenues / profits.

Airtel has done this successfully in India and is now on a mission to implement the same in Africa. It has embarked on a number of initiatives –

• Airtel paid US $10.7 billion to acquire Zain, the Kuwait based mobile telephone company’s operations in 15 African countries. This has given it a strong chance of increasing its operational base
• It is betting on opportunities in Africa where the mobile penetration level is less than 32% which is much lesser than India and there are fewer competitors
• It has outsourced its IT to IBM for 10 years and is looking for prospective vendors to outsource its network operations
• It has hired Ogilvy for its marketing, branding and PR activities across the continent

But the biggest challenge facing it currently is the different cultures, demographics and habits of people in the 15 different African nations. Could constant change of names from Kencell, Celtel, Zain and finally Airtel really change people’s perceptions of a telecom provider?

Only time will tell. But till then we can be contented to see an Indian telecom provider making it big at the world stage.

What do you think is the best strategy for Airtel to succeed in the African continent?