Outsourcing: Telecoms Give Their Networks the Boot

27.07.2009

Sprint's deal with Ericsson could be a case study for future efforts stateside-for better or worse. The deal provides a short-term financial boost for the . The company will get 6,000 employees off the books-and quick (during the third quarter of this year), which seemingly will provide immediate cost savings. And long term, it "should take headaches away from Sprint," says Dawson, "as Ericsson finds ways to do the same things Sprint used to do for less."

Ericsson has its work cut out for it. The company will have to create a new entity to serve its first major American customer. In addition, the vendor will be taking on three networks with multiple technologies, including iDEN, with which it has little experience, says Dawson.

The rapid transition will be tricky. "[It] will be difficult to manage, with employees' contracts moving over to Ericsson, the appropriate 'Chinese walls' created between the new Ericsson employees and the rest of Sprint," Dawson says. "With all that going on, it will be difficult for those employees to continue doing their day-to-day jobs without distraction and at the same [productivity] level."

In other words, an increase in employee turnover is likely.

Other telecom companies that have signed network services outsourcing deals face similar obstacles. But Sprint has hit snags with outsourcing in the past.