Thursday, July 9, 2009

Sprint outsources management of it's networks

Sprint Nextel and Ericsson have announced a seven-year outsourcing deal. Under the agreement, Ericsson assumes responsibility for Sprint's three networks; CDMA, iDEN and wireline networks. In exchange, Sprint will pay Ericsson about $5B. Oh that, and lay off 8,000 employees.

Steve Elfman, president of network operations and wholesale commented, "No other U.S.-based carrier has followed through on the business-enhancing vision inherent in Network Advantage," (the name of this plan), "Our best-ever network performance will become even better by leveraging Ericsson's world-class leadership in network services, their proprietary tools, and the knowledge of more than 30,000 dedicated and highly-specialized service professionals to power Sprint's Now Network."

According to an article in Fierce Wireless, "'The North American telecom market has finally cracked. Sprint's $5 billion deal with Ericsson is a game changer that challenges ingrained perceptions of what is core and non-core to telecom operator's business activity,' said Yankee Group analyst Camille Mendler. 'Until today, North American telecom operators had proved unwilling to outsource network functions on such a large scale. That said, North American operators are well acquainted with outsourcing: Between 2002 and 2008, extensive outsourcing of functions involving business administration, IT and customer service has already occurred. But externalizing the operation of physical network plant has largely been excluded until now.'"

MY COMMENT: I'm not necessarily opposed to outsourcing, but I'm more and more concerned that as usual, America is neglecting it's skills. Sprint is trying to save it's hide and this may be the way for them to do it, but eventually, we become a nation of smart (or not so smart) business people that don't know anything about process or how to do anything. As one of my co-workers puts it, "There is a big difference between smart and skilled, either or both is good for different reasons". What do you think?

UPDATE: It turns out, the employees may not necessarily be laid off. A good portion of them will be working for Ericsson in Overland Park, Kansas, where Sprint is headquartered. Considering all of Sprint's problems of late, perhaps they're better off? I guess it really depends on the terms of their employment.

For more:
- see this release

Related Articles:
Sprint in 'final negotiations' on Ericsson outsourcing

Report: Sprint, Ericsson sign $2B network outsourcing deal
Analyst: Sprint network outsourcing deal not 'imminent'
Report: Sprint to outsource network management to Ericsson
Sprint Nextel
to cut 8,000 jobs