Sprint’s Outsourcing Puzzle

May 4th, 2009 by · 4 Comments

The WSJ Online is reporting that Sprint Nextel (NYSE:S, news, filings) is in final negotiations to outsource the operations and maintenance of its cellular network to Ericsson (NASDAQ:ERIC, news, filings).  The move, should it actually happen, would transfer thousands of employees across the company and save a purported $2B.  Sprint has, of course, been trying to find a way out of its downward spiral ever since the Nextel acquisition went south.  While outsourcing by cellular operators has been a growing trend in Asia and Europe, this would be the first of its kind by a major US operator.  What do you think, should cell operators be outsourcing this sort of stuff?

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I am of two minds on this.  First, as an engineer I shudder at the thought of being a giant wireless company that doesn’t actually operate its own network.  If one thinks about it, why should Ericsson be able to do the job better and cheaper than Sprint can?  Why is this not part of what Sprint ought to see as its core expertise.  What makes Ericsson more qualified?  It feels as if this *should* be part of Sprint’s entire raison d’etre.  Without it, you have giant corporation whose operations consist of marketing, sales, and development of a technology it thinks others are better at operating.  But as an engineer, I am perhaps biased toward finding that prospect a bit appalling.

On the other hand, Sprint’s next generation network plans remain centered on its WiMAX venture with clwr.  In a sense, they have already outsourced the future (though they own a good chunk of it), so why not the present and past as well?  The CDMA network will be around for a while yet, but it isn’t the future – the iDEN network even less so.  So why not manage them as a commodity a bit early, simultaneously making a big dent in the company’s cash flow picture and generally stabilizing everything?

Still, I see commentary mentioning that such an outsourcing’s benefits would be to ‘free up strategic resources’.  Free them up to do what exactly?  Throw them into the breach?  Sigh.  I look forward to the day when I can view Sprint’s plans without that tangible hue of desperation shading everything.  Turn it around guys!  Turn it around!

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Categories: Old · Polls · Wireless

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4 Comments So Far

  • randomname says:

    This is STUPID! Sprint is NOT a marketing company. Its a freaking telephone company.

  • Rick Kearns says:

    I suspect the successful model of the company of the future will consist of two people: the CEO and the CFO. Everything else, operations, marketing, sales, legal, HR, etc. will be out-sourced. And the CEO will be spending his time trying to figure out how to outsource the CFO.

  • mr telecom says:

    Should this business model work for sprint, what is really behind all that? An eye opener in case the rest of the carriers decides to venture in that path. Furthermore, we need to evaluate its domino effect. More importantly, is to keep an eye on those companies in Asia and Europe and how this new trend is working out. I believe we need to focus on the so called job security of employees not just here in the US, what are the positive and negative effects of this new trend. I know Sprint employees are being promised at least one year employment but what about after? They don’t know and there is not even a warm fussy about their jobs and future. Human nature is reluctance to change but if the change comes with a well explained plan reluctances would not be so apparent. Lets look at few things and ask us, what about insurance, 401k plans, stock? Can you roll over those? Forget about seniority that is a thing of the past lets concentrate on your future and retirement no matter if we are young. All these things play a big role when time to pay a mortgage and feeding the family. Don’t overlook that you may need torelocate.

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