Toward Modeling Rationalization Potential in Network Operations and Maintenance Outsourcing

Opportunity to obtain qualified personnel and advanced technological skills is driving network operators in emerging markets to be interested in outsourcing their network operations and maintenance. Our overview of the network outsourcing deals undertaken by major network vendors both in established and emerging markets during the year 2009 highlights this trend. Although this new development provides network vendors with interesting new frontiers to explore, realizing the rationalization potential in this new domain still remains a challenging and vague question. In this paper, we make an attempt to shed light on the possibilities available in different dimensions where network vendors can exploit the economies of scale, economies of scope and learning curve effects in network operations and maintenance outsourcing. We also propose a simple linear algebra based model for modeling the rationalization potential and its corresponding cost-tradeoffs in network operations and maintenance outsourcing. Our model presents vendors with an opportunity to estimate the costs of an outsourcing deal upfront and in addition is also flexible enough to determine the economic feasibility of the deal.