 "Ericsson roped in to manage RCom networks through $1-bn deal")
According to the agreement signed today, Ericsson would manage wireline and wireless networks of northern and western states for eight years. The full-scope managed services contract includes field maintenance, network operations and operational planning.
RCom employees who were earlier engaged in in-house work would shift to the payrolls of its outsourcing partner. “We are pleased to welcome more than 5,000 employees who will join us from Reliance Communications and support our long-term commitment to India’s information, communications and technology market,” said Magnus Mandersson, executive vice-president and head of business unit global services, Ericsson. These employees would be integrated into the company’s local and global services organisation.
About 4,000 additional RCom employees would move to Alcatel Lucent, as a part of a similar deal signed last month. According to the $1-billion deal, Alcatel Lucent would manage RCom’s networks in southern and eastern states till 2020.
Analysts say the 9,000 employees account for 12-15 per cent of RCom’s workforce. The move, they said, would help reduce network operating costs and manpower expenses of the debt-laden company. RCom’s net debt is about Rs 37,361 crore.
“The transition will happen over time. The margins on this account would go up, but the impact will be visible only in the next four to six quarters,” said Sushil Sharma, senior research analyst, BRICS Securities.
Earlier, RCom had said shifting employees to partner rolls would provide its staff global opportunities and help the company create a leaner organisation.
It added outsourcing network operations to Ericsson would help optimise its resources and focus on user experience.
“Our partnership with Ericsson to manage wireline and wireless network would enable us to provide a higher level of customer experience, in terms of network and services. Given the complexity of networks increasing with platforms, technologies and application offerings, we are banking on the experience, innovation and technical expertise of Ericsson to improve the productivity of our network,” said Gurdeep Singh, chief executive officer (wireless business), RCom.
Ericsson would be responsible for improving network performance and service quality, which RCom hopes would lead to customer retention.
The two companies would also expand businesses and try to identify more areas to introduce services, they said in a release.