Outsourcing your interconnect voice to your competitor? Say…whaaaat???
Isn’t it amazing how industry trends seem to repeat themselves. In a dynamic industry like telecommunications the number of trend retreads we see is enough to give you whiplash.
Take, for example, the outsourcing of interconnect voice. People have been trying this for years. It sounds good, so carriers of all stripes are drawn to it like a moth to light. But is it the right thing for a carrier to do? What are the pros and cons of doing it? What’s the strategic advantage or disadvantage?
Well, we have a little bit of a bias here since we make and service a product that allows carriers to manage their interconnect voice business on their own, but that doesn’t mean our opinion is right for everyone. The idea of outsourcing a complex, intensive aspect of a carriers operations that isn’t material to their strategic or competitive advantage makes complete sense. That’s why subscriber based companies outsource their customer support - because they don’t view customer support as important or central to their strategic advantage. BTW, think about that for a second: many companies view customer support as something that is NOT strategic or central to their operations. Hmmm…weird, right?.
Many companies that include voice services in their product offering do so because of market necessity (feature/service parity). They do it because they have to, not because they want to. As a result, interconnect voice, that annoying, painful part of interconnect operations that generates razor thin margins and deals with voice (such a boring service), is considered “outsource-able”. In fact, carriers are anxious to outsource. Many carriers have offered an outsource offering. They have great appeal. Great value proposition; significantly reduce costs, or possibly eliminate them, improve quality and you’ll get a check from the outsourcer every month for your portion of the margin. Sounds great. EASY PEASY LEMON SQUEEZY. But, how come we are going through the third retread of this value proposition? Why haven’t carriers fully embraced this by now?
Well, as it turns out, there are as many reasons not to do it as there are to do it. They include:
- Carriers who outsource lose control over their interconnect operations. There is now a new middleman. Telecom is a real-time business. Control is pretty central to delivery.
- Outsourcing requires some conformity or change on the carrier. The outsourced carrier has their way of doing it, you want them to manage your interconnect operations and business, well, they aren’t going to do it the way you want them to.
- Market Forces. The interconnect voice market is dynamic and changing in real-time. If you give up control and the market changes, you are behind the curve.
- Many more.
Again, this isn’t to suggest that outsourcing isn’t the right option for a particular carrier. It may very well be. But this is the third time we have seen the industry try to go this way. Ultimately, almost every time the carrier who wanted to outsource their interconnect ended up changing their mind. Who knows - maybe this time will be different.