Three years ago, the UK’s third incumbent telco, KCOM Group, made some hard-headed strategic decisions that continue to be very much en vogue.
It handed the management of its network to BT Wholesale and that of its maintenance and field support services to Phoenix IT Services.
It also merged its three disparate enterprise businesses into one business unit, called Kcom.
All this was, executive director Paul Simpson told European Communications, an easy decision to make.
“We haven’t got the scale to be a fully-fledged, end-to-end service provider,” he said.
“But outsourcing has allowed us to focus on what customers are most interested in and put us a step closer to them.”
Certainly, outsourcing is not for everyone and it would be dangerous to apply the lessons of a boutique, quasi-regional operator across the board.
However, it continues to be an attractive option in an industry that is struggling to balance hard-to-come-by growth with growing capex requirements.
Last year, analyst house Infonetics Research predicted that will become a €62 billion market in 2015, up from €40 billion in 2009.
“We avoided a capex burden of some €12.5 million at a stroke by no longer having an obligation to invest in the network,” said Simpson.
He added the company had managed to squeeze out unspecified opex savings as well.
“Worrying about the network is no longer part of our thought process,” he added.
Simpson (pictured) claims quality of service is not an issue given BT has much more expertise in this field that Kcom ever did and the company transferred skilled staff to its partner.
If outsourcing enables operators to get closer to their customers, save millions in capex and guarantee QoS, it would appear to be a no-brainer.
Simpson admits there were challenges, however.
“It was a big shift to make from a cultural point of view – some of our staff woke up one day to find we had transformed the strategic direction of the business,” he said.
Consequently, the process took longer than the company ever anticipated.
Earlier this year, there was some debate on eurocomms.com about the effect of declining tech competencies at operators.
Simpson agreed that one of the biggest lessons Kcom had learned was that certain skills did need to be maintained inhouse.
Equally, the company had to work with retained staff on their new focus.
However, the real litmus test is whether the new strategy is winning new business.
Here, the jury is out to a certain extent.
The company’s latest financial figures show the fruits of Kcom’s outsourcing labour are yet to be seen.
Revenues, which also include the Eclipse business broadband and Smart421 consultancy brands, fell 2.7 percent year-on-year to €362 million for the year to 31 March 2012. EBITDA was also down.
However, Simpson promises that the next 12 months will see headline growth.
Much of this optimism is down to a 14 percent increase in multi-year contracts; the company has won business from corporates including Asda and Molson Coors, as well as a range of public sector bodies in the last year.
Driven by an increasing interest in cloud services, Simpson is predicting bright times ahead.
So would he recommend outsourcing to other, larger operators?
“It depends on how you view your network, but it’s definitely worked for us,” he concluded.