State-owned Bharat Sanchar Nigam Ltd has deferred till June 7 its decision to finalise a partner to outsource the company’s information technology operations to combine customer relationship management and billing, on a managed services revenue-share model.
The company did not specify the reasons for postponing the decision.
BSNL, the country’s sixth largest telecommunications company, had floated a tender in February to outsource its IT operations on a managed services revenue-model. By doing so, the company wanted to outsource non-core activities, cut down on its capital expenditure and instead “focus more on revenue generating activities and building and maintaining customer relationships”.
The company had invited bids from global and domestic technology companies which have an experience of handling contracts worth Rs600 crore and more than 1,000 employees for bidding for the contract. The prospective bidders were first given time till April 4 to submit their bids online, but the company extended the deadline first till May 9, and has further extended for final submissions till June 7.
In a managed services model, technology companies take over the hardware and software services of a company and manage it for the operator. This in turn would cut down on the heavy capital investments that operators make, and they would now pay to their outsourcing company a fee for managing the operations on its behalf. The model has been widely successful among telecommunications companies after Bharti Airtel, the country’s largest operator, had outsourced its technology operations in 2004 to IBM. The model was replicated by other operators, including Vodafone India, Idea Cellular and Reliance Communications.
During the first half of FY16, BSNL reported a loss of Rs3,462 crore on revenue of Rs12, 929 crore, while during FY15, it reported an operating profit of Rs672 crore while its revenue grew 4.16% to Rs28.645 crore.
The company aims to turn around and become completely profitable by 2020. One of the key parameters for turning profitable is the company’s plans to focus on customer acquisition while at the same time, outsourcing its IT operations to cut costs by converting its heavy capital expenditure on such services into operational expenditure.