Telecoms 'slow' in IT outsourcing

Telecoms operators in the Middle East and North Africa are failing to benefit from IT outsourcing efforts, according to a report from the US-based consultancy Oliver Wyman.

Telecoms operators in the Middle East and North Africa (Mena) are failing to benefit from IT outsourcing efforts, according to a report from the United States-based consultancy Oliver Wyman.

While companies have been outsourcing their information technology needs to lower costs and provide greater flexibility to operations, their efforts have fallen short and the majority of the region's telecoms executives are dissatisfied with their levels of IT quality.

Recent trends such as cloud computing and virtualisation have promised companies better IT solutions, flexibility and economies of scale. While uptake has risen over the years, penetration is still low, according to analysts, and strategies are not so clear cut.

"The IT sourcing of telecoms operators in Mena has lagged significantly behind that of their counterparts in Europe," said the report.

The two main obstacles have been concerns around sensitive customer information and the fear of losing control of critical systems. A lack of spending on IT was also a barrier.

Mena telecoms spend about 7 per cent of their operating expenditure on IT, whereas their European counterparts spend 14 per cent.

"The problem is that the majority of Mena telecoms have adopted a transactional approach to outsourcing. To achieve the full benefits, the companies instead need to adopt a more strategic perspective," the report said.

The lack of a coherent strategy with regards to outsourcing has left many of the companies to approach the issue on a case-by-case basis, usually using different vendors for different needs. This leads to a disconnected strategy with no clear overall budget for the different departments.

"There are some issues in the sense that there is a smaller number of local professional services in the Middle East. It is an underdeveloped sector," said Camille Mendler, the principal analyst at Informa Telecoms and Media.

"IT outsourcing in telecoms varies according to each operator, they tend to outsource parts of their billing and their networks and non-core business, but the telcos are not necessarily leading in this aspect."