One of the more polarizing discussions that can occur among staff in IT and Telecom departments is the value of outsourcing. Especially at a time when employment is scarce, and when a proposal from a potential telecom expense management or wireless expense management vendor may include savings due to reducing IT staff headcount, which may or may not include your head.
The core of the debate relates to internal resources/competency, productivity and ROI. Frankly many corporate decision makers contemplating outsourcing all, or portions, of their telecom or wireless management are skeptical. It seems they realize there are inefficiencies in their internal processes and workflow, and believe there are areas they can improve upon, but they’re not sold on the value/ROI of an outside vendor making those improvements.
And they may be right to be skeptical. As a case in point take a listen to the Telecom Junkies podcast “State of the TEM Market, Part 2”. TEMIA’s Joe Basili and Telecom Attorney Hank Levine have a lively discussion on the topic of telecom expense management and the value of outsourcing.
So when should a company considering outsourcing and what areas provide the greatest potential ROI. Outsourcing management of wireless seems to have the greatest potential ROI. Unlike many wireline services where costs may remain static for months or years, wireless services are a constant moving target and never ending headache for enterprises.
For a quick example let’s take a look at a company with 1000 mobile devices utilizing AT&T, Verizon and Sprint and try to decide whether outsourcing would make sense. First we need to determine our overall costs for internal management. These costs would include the dollar amount of all wireless invoices plus labor costs, for example:
- Invoice processing and auditing – manual data entry to complete cost allocation and billing back departments for usage
- Helpdesk Functions – Ordering devices, changing plans, ESN swaps, BES management etc. Approx: 1-2 calls a day per 100 users requiring an average of 10-20 minutes to resolve each request
- Wireless contract negotiation: Subsidies, termination penalties, discount percentages, negotiated credits
Based on our fictitious company with 1000 mobile devices we’ll assume an average cost of $60 per user. Add 20% for taxes and fees we’ll estimate overall carrier costs at $72,000.
Now for the more ambiguous costs of labor. Lets assume at least one person full time at a cost of $55,000 or $4,500 for the month plus 20 hours for other personnel at a cost of $600. Total labor costs $5,100.
The total cost for internal wireless management: $77,100
Now we’ll consider that an outsourced Wireless Expense Management provider would offer you all of the above for a cost of $4-$6 per device.
For the wireless costs we’ll reduce the cost per user down to $5 since the wireless expense management company should be able to increase discount percentages, optimize rate plans and help curb usage. This gives us a cost of $50,000 and we’ll add 20% for taxes and fees, giving us a total of $60,000.
We’ll then add the highest per device management fee of $6 for the 1000 users adding $6,000 to our costs.
The total for outsourced wireless management: $66,000
The question then becomes can the provider deliver on their promises or will you end up paying an internal employee, in addition to the per device fee for outsourced management, ultimately driving costs higher.
What have been your experiences when evaluating the value/ROI of outsourcing management of your telecom and wireless services?
For the past ten years Vocio’s staff of telecom consultants, telecom auditors, and wireless experts have successfully helped companies reduce annual telecom budgets by millions of dollars. We also provide consultation on ways to lower costs for every type of voice, data and Internet service from Legacy TDM to MPLS and SIP trunking. We can be reached at 888-200-8647.