GCC telcos need to increase efficiency – report

Eliminating inefficiencies in operators’ processes to help them achieve 30% cost savings

Tags: Boston Consulting Group (bcg.com)IT ProcessesUnited Arab Emirates
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GCC telcos need to increase efficiency – report GCC telecom operators need to find ways to improve earnings by optimising their operations, says BCG report.
By  Nithyasree Trivikram Published  September 5, 2010

GCC telecom operators could achieve cost savings of up to 30% by cutting wasteful and inefficient practices, according to a new study by Boston Consulting Group.

Joerg Hildebrandt, partner and managing director at BCG Middle East, said: "Telecommunications is still one of the most inefficient industries, with as much as 30% of its cost basis eaten up by waste. This waste is difficult to see because it is embedded in telecom processes."

An operator's wastage on costs was found in areas including correcting processes or product defects, overproduction, inventory, and over-processing. "This is true not only for incumbents in saturated markets, but also for telcos in developing markets," Hildebrandt said.

"GCC telecom operators need to continue searching for growth, but equally important, they must find ways to secure or improve earnings by optimising their operations," the report said.

The BCG analysis states that the traditional cost-cutting methods such as cutting marketing budgets, travel, advisory and renegotiation of major supplier contracts; and short-term or "one-off" approaches to cutting waste are not the best means to capture the "enormous potential savings" for operations.

The report also highlighted complexity as the key driver of cost inefficiencies in both telecom processes and business models. Over recent years the complexity of operations has increased exponentially through new products, partnerships, and various service levels to customers, the study revealed.

The study suggests that operators could be able to reduce complexity by setting overall objectives to identify and manage the "strategic trade-offs" that drive a company's operating model.

The report also indicated that employees should be involved in the drive to increase efficiency, as employees are often the missing links in operators' improvement efforts.

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