Telcos spend up on outsourcing

Telcos spend up on outsourcing

Cost-cutting pressures and the need to proviede innovative services quickly force the issue

Facing pressure to develop new services quickly and to cut operational expenditures (opex) telecommunications, service providers are increasingly outsourcing their day-to-day network operations to professional service houses, according to a recently released report from analyst firm Infonetics Research.

Driven by traditional IT integrators and the telecom vendor integrator arms of Alcatel-Lucent, Cisco, Ericsson, Hewlett-Packard, Huawei, IBM, Microsoft, Motorola, NEC, Nokia Siemens, Nortel, and others, the professional services shops provide everything from vendor network integration, network assessment, monitoring, and network design, to the service providers who hire them.

In 2007, service providers around the world spent $US57 billion on such outsourced services, according to the report by Infonetics Research, Professional Services to Service Providers: Market Share and Forecast.

"For equipment vendors looking to increase their market share or get into the professional services market, Asia/Pacific is the place to be, as carrier spending there represents about a third of the worldwide market. There is strong activity in India with multi-billion dollar outsourcing contracts, and once China's telecom restructuring is complete, we expect new deals to emerge there as well. Africa and Latin America are the next big opportunities in this market. Once the competitive landscape in Mexico and Brazil becomes more consolidated with a few large players combining to reach economies of scale, they too will look to further cut opex by outsourcing key professional services," said Stephane Teral, principal analyst for service provider VoIP, IMS, and mobile infrastructure at Infonetics Research.

Len Rust is publisher of The Rust Report

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