Telecoms operators should urgently review their outsourcing strategies or risk being out-maneuvered by rivals, according to a new report, Outsourcing by telecoms operators: strategic and commercial options, published by Analysys, the global advisers on telecoms, IT and media (http://research.analysys.com).

* Telecoms operators must re-evaluate their views on outsourcing or risk overlooking an important competitive weapon

* Pioneers have proven that outsourcing can be made to work

* Approaches to outsourcing must be varied according to each operator’s market positioning

* The market for IT, telecoms-network and customer-service outsourcing by telecoms operators will grow rapidly between 2005 and 2010

* New report provides a framework helping operators to select the activities they ought to outsource, and shows which outsourcing markets will show the strongest growth

“Outsourcing has become an important weapon in a telecoms operator’s strategic arsenal,” says the report’s author Simon Sherrington. “An effective and well-managed outsourcing scheme can deliver flexibility, reduce time to market for new services, and help to deliver profit growth for shareholders.”

Although failed outsourcing contracts received a great deal of media attention, the author points out that there are now numerous examples of operators that have improved time to market for new services, and/or improved organizational flexibility as a result of handing over management of different activities to third parties. There is also evidence that outsourcing can help operators to achieve significant cost savings.

“This is not an appropriate strategy for every operator in the telecoms market, but pioneers have proven that the outsourcing model can be made to work,” adds Simon Sherrington. “Operators should really consider the competitive benefits of outsourcing activities traditionally considered as core.”

According to the report, an operator’s market positioning, its strategy, internal expertise and current efficiency should all be considered before it decides to outsource. These factors influence the risks and benefits of handing over the management of an activity to a third party. The new report reviews the competitive importance of various operational activities for fixed and mobile operators, and analyses the potential benefits and strategic risks involved in outsourcing them, to identify a list of activities that operators should investigate with a view to outsourcing. According to Sherrington, “At the very least, the process of reviewing whether an activity should be outsourced throws a spotlight on areas for improvement and brings in new ideas.”

The Western European market for outsourcing technology and customer services by telecoms operators is expected to show 6% annual growth between 2005 and 2010, rising from EUR5.9 billion to EUR8.0 billion. Outsourcing of end-to-end network operation and management will be one of the fastest-growing segments, showing a CAGR of 14%. “We expect to see a number of operators outsourcing end-to-end network and IT management, particularly those that don’t have sufficient scale to match the service investments or the operational efficiencies of larger peers,” says Sherrington. Outsourcing of IT services, billing, OSS and content/application platform management are also expected to show robust growth.

Outsourcing by telecoms operators: strategic and commercial options takes an in-depth look at outsourcing of technology management and customer-services activities by telecoms operators. It reviews the types of outsourcing arrangement that have become common and the benefits that outsourcing has delivered. It provides a framework to help operators review whether they should be outsourcing more, and to decide what they should be outsourcing. It also identifies leading suppliers of outsourcing services and provides market forecasts to show where the biggest sources of outsourcing revenue are expected to be found.

The report can be ordered from http://research.analysys.com, priced at GBP1700 plus VAT. For more information, telephone Analysys on +44 (0)1223 460600 or email [email protected].