Sprint to the outsourcing finish line.
Mobile phones and the telecommunication industry as a whole are big business but that doesn’t mean that everything is going well for all firms. There has been a huge expansion in the market but some of the proposed developments and technological changes haven’t developed as quickly as some would have liked. There is also the fact that the current recession is causing a number of people in the consumer market to cut back on non-essential expenditure. A phone is pretty vital for most people but having the latest model is not. There will always be those that must have the latest product but many more consumers are contenting themselves with an existing model and there has been a dip in new product sales and contracts.
One firm that this has impacted upon is Sprint Nextel, who are the third largest wireless telecommunications network in the United States of America. The firm has been hit especially hard by the loss of subscribers, which have been dwindling at a great rate. This has forced company bosses to look for ways to cut back costs and to look for ways to improve the current financial status of Sprint. It is reported that Sprint are locked in discussions with Ericsson to see if both parties can come to an agreement that will be of benefit to all.
It is said that one of the topics under discussion is the outsourcing of the management and maintenance of the Sprints cell network to Ericsson. Although this move will cost Sprint a sizeable figure up front, it is hoped that it will help them offset their current financial difficulties. If this is the case, industry sources expect a sum of up to $2 billion to be paid from Sprint to Ericsson to provide this service. This is clearly a deal that holds a lot of potential for Ericsson but negotiations are still ongoing.
It is also said there may be a transfer of between 5,000 to 7,000 jobs if the outsourcing move goes ahead. Given the perilous financial condition that many people are experiencing, anything which can help people maintain their jobs is a good thing and if this outsourcing move helps this aim to be achieved, it should be considered of great merit. In addition to moving so many staff off of their wage bill, the deal would be expected to remove around 20% of Sprints total network costs. This would be of immense value to Sprint and would allow the company to return to a solid financial footing and reorganizer itself better.
Outsourcing remains one of the most viable options for firms experiencing financial difficulties to consider and the latest set of discussions are not a surprise to most industry insiders. With some of the biggest names in the major industries now suffering due to the credit crunch, expect to see a greater number of firms exploring the possibilities of outsourcing as a way to reduce costs and move some of the labor costs out of the company.
