Topic: Outsourcing (topic 6)

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Student ID: 1011962

Henry Aronsson

ES4C9 - Supply Chain Management ES4C9 - Supply Chain Management Oral PresentationOral Presentation

Presentation PlanPresentation Plan

ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Introduction to telecoms market and TalkTalk

TalkTalk outsourcing

TalkTalk’s outsourcing risks and how they could improve

IntroductionIntroduction

ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Brief History of the Market

From 1912 GPO (government department) runs telecoms monopoly in UK

In 1981 GPO split into BT and The Post Office

Telecommunications Act of 1984

o Becomes British Telecommunications PLC

o Abolished BT’s exclusive privilege of running telecommunications systems -

allowing competition to enter the market

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

TalkTalk

Carphone Warehouse acquires Opal Telecom in 2002

2003 TalkTalk launches with a “guarantee” that its calls will be cheaper than BT

Launches broadband service in 2004

By late 2009 has 4.1 million customers

o Buying out Pipex, Tele2, Freedom2surf, Nildram, AOL and Tiscali

2010 TalkTalk demerges from Carphone Warehouse

2012 launches YouView and TalkTalk Mobile

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Key Stats, Market & CompetitorsBT Group PLC, BSkyB, Virgin Media

BT Group largest – own majority of the UK network infrastructure

Most telephone & broadband customers

Virgin Media – leads “triple play” market with 2.9m customers

also leads in greatest number of fibre optic customers

Sky leads television services

Pre-tax profits: BT £2.4bn, Sky £1.2bn, Virgin Media £1.03bn, TalkTalk £122m

TalkTalk, the only company that isn’t the market leader in any of its service areas

Customers 18m 10.5m 7.5m 4.3m

Data from Mintel Oxygen (6)

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

A Quick Look at: Porter’s Five Forces

Very Low

Very Low Relatively Low

Medium

Very High

ES4C9 – Supply Chain Management Outsourcing - TalkTalk

IT Services Data analysis, performance management, testing

Outsourced to India in 2009 – Tata, Patni – saved nearly 50% on

operating costs by offshoring

What Does TalkTalk Outsource?What Does TalkTalk Outsource?

Consumer Satisfaction Management Outsourced to Anovo in 2007

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Customer Services Until 2011 ran its own call center based in Waterford, Ireland

o Outsourced to Transcomo 575 jobs cut and savings of 40% realised

What Does TalkTalk Outsource?What Does TalkTalk Outsource?

Internal Processes Deal struck with Wipro BPO

Finance and accounting , HR, supply chain management, data

management …..

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Product Management, Manufacturing & Repair All Wi-Fi DSL & fiber optic routers manufacture is outsourced to D-Link

Corporation

What Does TalkTalk Outsource?What Does TalkTalk Outsource?

YouView boxes outsourced to Huaweio “Faced with increasing pressure to improve profit margins as well as other operational

challenges brought by telecom industry value chain, more telecom operators

worldwide tend to choose Huawei for network O&M outsourcing”

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Installation Technicians, Line Maintenance/Repairs Varies by area – they also have their own technicians

o Home broadband installation is outsourced to BT Openreacho Line repair outsourced to Openreach

What Does TalkTalk Outsource?What Does TalkTalk Outsource?

ADSL broadband connections in some areas Outsourced to BT Wholesale

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Risk of Outsourcing for TalkTalkRisk of Outsourcing for TalkTalk

TalkTalk reputation for poor customer serviceo Outsourcing result in loss of direct customer contacto Loss of control means quality is also out of their control

Loss of Core Activitieso What don’t they outsource?o How are they any different from the next competitor?

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ES4C9 – Supply Chain Management Outsourcing - TalkTalk

Recommendations for TalkTalkRecommendations for TalkTalk

More vertical integration BT is very highly vertically integrated, as is Virgin Media Will allow more control and price determination

Consider re-insourcing customer support Improve customer satisfaction e.g. RSA & Santander If not outsourcing then stop offshoring

ES4C9 – Supply Chain Management Outsourcing - TalkTalk

ReferencesReferences1. The Historical Development of BT, The BT Group 2010,

Retrieved 12th November 2013 from www.btplc.com/Thegroup/BTsHistory/History.htm

2. EVANS, R., Privatisation Shares – How Have They Fared?, The Daily Telegraph, 18th November 2011

3. RICHARDSON, T., Carphone Warehouse Buys Opal Telecom, The Register 6th November 2002

4. Carphone Warehouse: Accusations Fly, 3rd June 2003, The Register

5. Carphone Raises Profit Forecast, BBC News, 27th November 2009, Retrieved 12th November 2013 from: http://news.bbc.co.uk/1/hi/business/8382119.stm

6. Mintel Oxygen report, June 2010, Bundled Communication Services - UK -

7. TalkTalk gains 47,000 Fibre subs but only 5,000 new broadband customers, Recombu, Retrieved 13th November 2013 from: http://recombu.com/digital/news/talktalk-47000-fibre-subs-5000-new-broadband-customers_M12407.html

8. TalkTalk CIO Hails Merger Integration Success, Computer Weekly, 10th June 2010, Retrieved 13th November 2013 from: http://www.computerweekly.com/news/1280097143/TalkTalk-CIO-hails-merger-integration-success

9. Case Studies: TalkTalk United Kingdom: Customisation Cuts Costs for TalkTalk, ANOVO

10. ASTEAD, J., TalkTalk Waterford call centre sold for €500,000, The Independent, 24th January 2013

11. UK Based Broadband and Voice Telephony Services Company TalkTalk Selects Wipro BPO as Strategic Partner, BLOOMBERG, Business Wire, 3rd August 2011.

12. LANE, A., Router wars: TalkTalk opens a home front against BT, Sky and Virgin, 12 March 2011, Recombu

13. Outsourcing Solutions, Quotation extracted and retrieved on 14th November 2013 from: http://www.huawei.com/uk/solutions/reduce-tco/hw-078686-outsourcingsolution.htm

14. Hundreds report being let down by Openreach, BBC Watchdog, 30th October 2013, Retrieved14th November 2013 from http://www.bbc.co.uk/programmes/b006mg74/features/bt-open-reach-customer-service

15. DUNN, S., TalkTalk gets the Wooden Spoon award for worst customer service AGAIN, This Is Money, 11TH January 2012

QuestionsQuestions

ES4C9 – Supply Chain Management Outsourcing - TalkTalk