Niyamath Parveez

The past few months has seen Sprint Nextel in the news quite a lot with outsourcing stories and there is no doubt that it is forming a large part of the company’s current strategy. This makes sense as due to the current economic climate, Sprint Nextel are experiencing some difficulties and are lagging behind some of the other players in the telecommunications industry. Although Sprint Nextel are still one of the major firms in a growing and very competitive industry, there is no doubt there is great scope for improvement and the company’s decision to actively pursue outsourcing solutions to their problems is likely to bring its reward but there will be difficulties along the way. As much as firms are looking to lower their costs and safeguard their own financial futures, the exact same can be said for the employees of a firm.

Losing a job is terrible but losing a job during a recession can put an enormous strain on a person and knowing that they have lost a job that is being outsourced is particularly galling. If there are no jobs or the company goes bust, it is annoying but at least the now unemployed person can say there was nothing much that could be done. It is obviously a very different situation when it comes to a job that is outsourced as clearly the job and role still exists, it has just been moved to somewhere else for a lower wage rate.

This unfortunately is the solution that has befallen 68 employees of Sprint Nextel, with their Olathe facility featuring the latest swing of job losses due to the outsourcing. The firm has went through the legal procedures and filed notices to indicate that the printing and mailing services it operated at this location would be shut, resulting in the loss of jobs. These jobs have been given to DST Output Solutions unit, who are able to carry on the specialist mail operations service that was administered at the location but obviously for a more attractive rate. The fact that the jobs are specialized does create a further pressure on the unemployed staff as most of their recent skills will be related to that particular industry and style of working. If there are no jobs in that particular field people will have to either switch their chosen employment field or perhaps re-train themselves in order to be able to perform different duties. Such is the current economic climate that many people are looking to give themselves as many skills and expertise as possible but again, the cost of doing this may be prohibitive.

These latest job losses are part of the 8,000 overall jobs that Sprint Nextel indicated they would shed during the course of this year. Back in January 2009, the firm announced that they would be looking to lay off around 8,000 workers in the future as part of their on-going stance and fight to become more financially responsible. Outsourcing is a great tool for the firms but it is easy to see why not everyone is so keen to see its rise continue.

The telecommunications industry is one of the fastest changing and developing industries which can bring positive and negative elements to firms who are operating in the industry. Those who are deemed to be at the cutting edge of the technology are always likely to be loved and adores by consumers all over the world but if public perception of a firm takes a negative turn, it can be extremely difficult to try and turn this feeling around. This means that companies may be considered only as good as their latest product or service and fortunes can turn quickly if they do not keep up to date. One firm who has experienced a drop in their fortune and popularity of late has been Sprint Nextel, one of the major wireless communicators in America. The company is said to have just under 50 million consumers in their home territory alone but in an industry where upgrades and re-purchases are vital, a firm that falters in providing great resale value to a customer will struggle. There has been a notable dip in the income of the company in recent months and periods and there has been a movement to shore up the inefficient areas of the firm. This has seen Sprint Nextel look to outsourcing as a way to improve their current standing as they, like many firms before them, decide that outsourcing their current workload is the solution to their short term problems.

There is no doubt that this tactic can be a fantastic opportunity for firms to reduce their labor costs whilst retaining the quality of the service or product they offer. As long as the right outsourcing company is selected, there is no reason to believe that the firm will suffer any negative impact or connotations for following such a tactic; in fact, it is likely if the outsourcing is done well that they will receive a great benefit from doing so.

Sprint Nextel will become the first of all the American based telecom providers to begin an association with an external agent for managing their network. This stands in contrast with the tactics that the firm has undertaken in the past as they have been notoriously strict about their dealings and who they allow to work alongside them. Perhaps the $5 billion that the firm will receive for the seven year contract has went some way to changing the mindset of the firm and encouraged them to loosen their approach to working with third party agents and firms. Ericsson are the firm who have been awarded the privilege of being the agent Sprint Nextel entrusted with providing this service and no doubt it will provide a great number of bonuses and benefits to them as well as Sprint Nextel.

At the moment, Sprint Nextel appear to be the only firm who are undertaking this plan of action but if their first foray into the outsourcing industry proves to be a success, you can guarantee they will not be the last. Any industry where there is such a tight margin for error will always be on the lookout for new ways to improve their outlook and if this outsourcing move is a success, expect to see many other firms imitate the moves of Sprint Nextel.

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.