)
The company today signed a deal outsourcing its network operations in the Western and Northern states to Sweedish company, Ericsson. Last month, a similar deal was struck with Alcatel Lucent for Eastern and Southern states. Both these orders are worth $1 billion (5,367 crore).
The eight-year deal with Ericsson will absorb 5,000 employees of RCom. Around 4,000 employees will move to Alcatel Lucent in a deal which will last till 2020. Analysts say that in total, this could represent as much as 12-15% of RCom's workforce.
In addition to reducing RCom's manpower costs, it will also have a positive impact on network operating costs of the company. "The transition will happen over time. The margins on this account would go up, but the impact will be visible only in the next 4-6 quarters," said Sushil Sharma, senior research analyst, BRICS Securities.
RCom had earlier said that shifting employees to partner rolls, would provide their staff with global opportunities. It would also help the company create a leaner organisation. Apart from this, RCom said that its deal outsourcing network operations to Ericsson today, would help use their resources better and focus on user experience.
“Our partnership with Ericsson to manage wireline and wireless network enabling us to provide a higher level of customer experience in terms of network and services. Given the complexity of network 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 of wireless business, Reliance Communications.
As a part of the deal announced today, Ericsson will get a full-scope managed services contract that spans over field maintenance, network operations and operational planning. It will also spread across the 2G, CDMA and 3G mobile offerings of the dual technology telecom operator.
Also read: Reliance, Ericsson sigh $1 bn managed services contract
