Network Outsourcing: A Global Strategic Business Report
San Jose, California (PRWEB) August 14, 2012
Follow us on LinkedIn – The concept of Network Outsourcing, first brought into practice by medium and small mobile service providers, is based on few cardinal principles. In such a model, operators benefit from the economies of scale, and technical prowess and specialization of vendors, to gain an advantage in the volatile technology landscape. Over the years, major service providers in European and North American market have also started taking interest in the Network Outsourcing model to manage expenditure and benefit from the value added services.
The mobile service market is highly competitive across the globe. High competition is leading to mobile companies indulging in price wars, and subsequent decrease in margins, especially in low ARPU countries. Demand for greater data capacity, to cater to surging data demand, drives the need to lower the cost of operations for operators. The cost of procurement of infrastructure, which consists of about 70% of the investment costs and operations, forms the recurring element. Operators face a lot of pressure to increase capacity and lower costs, driving them to enter into innovative service level agreements with vendors of network equipment. The operators, in such unique contracts, hold back only the technological strategy and the other critical function, quality, while leaving out the designing, planning, building, operating and maintenance responsibilities of the network to vendors. Mobile phone service providers benefit largely by entering into agreements with trusted vendors for end-to-end solutions.
The macroeconomic environment can act as a motivator or inhibitor for the network outsourcing market. Governmental policies play a major role in the growth of any industry or sector. As the telecom sector plays a pivotal role in the development of a country with implications percolating to the far recesses of the society, efficient planning and implementation of the regulatory telecom policy is imperative towards promoting overall growth. Liberalization of the telecom industry in many regions opened the market to all players, including incumbent operators. Without subsidies and a level playing field, all telecom and ICT related services found a fertile spawning ground. Moreover, other policies also indirectly affected the network outsourcing industry. The national manufacturing policy, implemented in few countries, aimed towards augmenting growth in the manufacturing sector, supported telecom equipment manufacturers in production of indigenous equipment, which are lower in cost compared to imported equipment. Such initiatives operate in synergy, to augment the growth of the telecom industry, and in bringing about growth across all sub-sectors.
Even in the recent past, multinational telecom operators followed an infrastructure driven business model. The operators took immense pride in the large scale of infrastructure, even as operational and maintenance expenditures surged. The shift in perception, motivated by players in the emerging nations, occurred largely towards outsourcing non-critical operations, or even sharing of infrastructure with other players in order to bring down costs.
Network Outsourcing market, seen primarily as a cost reduction initiative, is gaining acceptance amongst a wider audience. However, network outsourcing, in time, has evolved, from a cost reduction initiative to a value added offering. The challengers, leveraging the inherent cost advantage in outsourcing, with an intention to compete with tier one operators, utilized the services of outsourcing firms. In the early years, outsourcing as a service was restricted to the challengers, but lately, even tier one players are showing keen interest in outsourcing network management to efficient service providers.
The transition, post a proactive initiative towards enhancing the value in services offered by the vendors, has garnered the attention of tier one players. Leading operators are utilizing the services of the outsourcing vendors without the primary intention of lowering expenditure. Outsourcing vendors, aware of the dynamic technological landscape of the telecom industry, provide value added services to reduce uncertainties, such as an impending technology shift, by supporting the top tier operators in adapting to the tumultuous environment. The vendor–operator relationship, as the market matures, has evolved into a strategic partnership, also increasing the duration of agreements/contracts. The contracts are now framed with intense deliberation, and with an intention of a long-term strategic affiliation. Moreover, service level agreements, governing the relationship, are becoming more complex and elaborate in nature.
As stated by the new market research report on Network Outsourcing, Europe represents largest market for expenditure on Network Outsourcing, while Asia-Pacific region represents the fastest growing market registering a CAGR of 9.7% over the analysis period.
Major players in the global marketplace include Alcatel-Lucent SA, Huawei Technologies Co. Ltd., International Business Machines Corporation (IBM), Nokia Siemens Networks, Telefonaktiebolaget LM Ericsson, and ZTE Corporation.
The research report titled “Network Outsourcing: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, and other strategic industry activities. The report provides market estimates and projections in terms of value (in US$ Million) for major geographic markets including the US, Canada, Japan, Europe (France, Germany, Italy, UK, Spain, Russia, and Rest of Europe), Asia-Pacific, and Rest of World.
For more details about this comprehensive market research report, please visit –
About Global Industry Analysts, Inc.
Global Industry Analysts, Inc., (GIA) is a leading publisher of off-the-shelf market research. Founded in 1987, the company currently employs over 800 people worldwide. Annually, GIA publishes more than 1300 full-scale research reports and analyzes 40,000+ market and technology trends while monitoring more than 126,000 Companies worldwide. Serving over 9500 clients in 27 countries, GIA is recognized today, as one of the world's largest and reputed market research firms.
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