Service providers in telecom space, particularly small to medium sized are contracting out their operations to Managed Services providers, essentially vendors out there. There must be so many business justifications in doing so, but are the service providers accepting their failure to run the operations effectively. After all what do these managed services providers do? They don’t do any magic. Just operate the services in an efficient manner. So how a telecom service provider is still benefited even after paying them for managing? Isn’t that an additional cost? How is it that it becomes cheaper to them?

Does this mean that vendors while selling the solution, do not reveal ‘something’ to which only they are privy and when handed over the operations they are well equipped or the resources with the service provider are not properly trained. Somewhere, we have a gap that is creating market for managed services.

Look at the services from a different angle and how it is impacting the schema of telecom market. Vendors are becoming more powerful in the space. They first sell the solution and then charge their customers for their operations. Since they get the direct control of the operations, many other allied decisions are then in their hands. So they become the real powerful influencers in the decision making process. Of course, that is going to directly help them business wise.

Telecom service providers might be getting financial and operational benefits by letting a third party to manage their services, but look at the associated issues.

1. The dependence on the vendor is increasing. In fact, the service provider is itself inviting a vendor to take charge of everything. Diversification is the best ever thought strategy for minimizing the risk- risk of anything including dependence on any or a few business associates including the vendors.

2. The people running the operations are from the vendor (managed services provider). It can never happen that they will look into the interests of the company in the same manner as their own employees would; particularly when the two are in conflict. Their bondage with the company will always be loosely knit.

3. Whatever smart contracts we may sign off, the managed service provider can pack up and leave the company in an awkward position. For the managed service provider only has financial stake and to some extend reputation. On the other side, the telecom service provider has a large stake – customers, business, market, services, brand and what not.

4. Competitive advantage and differentiation is what everybody out there doing business it trying to do. By bringing a third party so close to business, we are losing all this. How come can they facilitate this when they can be having our competitor as the other customer? Agreed that we can have a contract clause that they won’t do direct business with them, but soon after finishing the contract with us they can go with very valuable information to our competitors to ‘manage’ them now.

5. Sometimes, the managed services can also become an impediment to the expansion plans of a service provider. For instance, the operator wants to go ahead with an expansion plan using a particular technology and the managed service provider is not well equipped to handle it. In such scenario, they will always oppose it or suggest some other way of achieving it that could not be beneficial to the service provider. To allure them, they could offer them heavy discounts and show them the ‘benefits’ like interoperability with the existing system, homogeneity with the network and all that, but it could not be the way in which the service provider would want to.

My arguments don’t propose that the telecom service provider by contracting its operations to a third party leaves to think. It is not that they do not take all their strategic decisions on their own. But the issue is they have got in an outsider who tells them that we are here for you. Gradually the dependence grows on this outsider and turns into a key influencer. They could be coming up with solutions based on ‘Win-Win’ principle, but they will always try to skew the principle more in their favour.

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