It Cuts the cost temporarily, we all know that, but can outsourcing in these quantities really be functional in the long run? I really don’t see any way that it could be sustainable. Also, is there a possibility that a company like AT&T could want to take the outsourced segments of the business “in house” again, after this whole concept of outsourcing fall down like a house of cards? Opinions?
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AT&T will be divested. Stephenson and Stankey will have no choice as the pressure has already mounted with dissatisfied investors even though their friends are on their board. Stankey was a odd fit for a Entertainment Lead since he had no experience or understanding of this vertical, Their strategy is doomed and now that they have lost the people who dedicated their careers to make AT&T a success. This is the story of Sears all over again, where this executive team could not formulate a strategy to grow their businesses. Buying companies at a peak with no real integration plan is not a robust strategy. Now everyone can see the result of Stephenson. He will go down as the worst CEO in Telecomm history.
I don't think anyone is saying it'll all fall down like a house of cards, but there will definitely be a drop in quality of specialized billing like the state contracts. Those invoices go through a special consolidator system that's kind of held together with duct tape and bondo. It's really 2 systems (plus) tied together by people that do a lot of data-tweaking along the way. If the people that know how to do all the monthly rigging leave, billing accuracy will suffer. It's likely in a few years when the replacements learn what those before them knew it'll get better again... or maybe AT&T just plans on getting rid of specialty billing like state contracts. If they stick with the easy billing like wireless & media they'd be fine with less people. And maybe they can just give up on state & federal contracts & automate everything.
Why would it fall down like a house of cards? Sounds like wishful thinking on your part. I don't think they are cutting the costs temporarily. I think it's permanent.
@1kco
I'm one of those billing reps. I did billing for CA Calnet contract & I was also the billing rep for our state's largest city. You are right in that it was definitely a unique job. I'd been doing this job for 20yrs & I was damn good at it. On 7/1 my work was moved to Florida. I have heard from my customers that they are not getting any real help, the reps don't know what they are doing (and I feel for them, because this is no their fault), customers are being given 1-2 months ETA on their billing issues. The list goes on. All while I'm sitting in surplus when I could still be utilized. In 2 weeks I move to a job 5 steps below what I was. All for some security. But who knows how long that will last.
AT&T will be in deep trouble if they let all the Billing people go that handle the 'out-of-the-ordinary' stuff.
For example, AT&T has several State Contracts that involve special billing for public-owned entities like schools, government sites, etc. There's a lot of data-tweaking done each month just to make things invoice properly. The team that does it has been shaved to skeleton-crew over the last 2 years of down-sizing, but still manages to get it done every month due to their years of experience & ability to handle unique problems that crop up. They use tools (some fairly archaic) that a contractor probably wouldn't understand... and might not even be able to get to work. The duties & situations vary each month as new issues arise.
That group is dependent on other teams with unique skills. Some provide source data and others compile data into end-customer invoices. Special handling & tweaking is required by each group.
If AT&T lets these experienced people go & outsources it, cracks will appear pretty quickly & some billing will become unsatisfactory within a couple months. AT&T may be shooting themselves in the foot just to get a short-term stock boost. And when the big investors (that are encouraging all this) cash out their stock for a profit in a year or so, AT&T will be left with the mess.
What WMW said. The only problem is the diversification into areas of business that they are 100% clueless. How much talent had fled from the Media Space? Does anyone have confidence that the content space will be able to grow under ATT?
You have to understand that T only thinks quarterly. How can “we” increase revenue and profits from quarter to quarter. That’s all that matters because at the end of the day , all they care about is pleasing shareholders and Wall Street. That’s all any of this is about. And oh along the way, if we can enrich ourselves with merger and acquisition bonuses , well that’s the gravy. So yes , At&t WILL continue to outsource as that’s the fastest way to boost profits. Stephenson and gang will be long gone and enjoying their retirement long after theyve destroyed the company. Long term planning is not in their calculations at all.
Hellooooo, Anyone who has been around long enough to see the IBM and or AMDOCS debacle of past 15 years has seen how this has played out....I also do not believe the exec's can be blind to the quality of service received from the vendors, constant late delivery cycles and escalated costs as the vast majority of projects blow their budgets halfway through the project cycle.....It is a vicious cycle and we have all been riding this rollercoaster for years.
Of course not. AT&T isn't known for it's long term thinking.
Outsourcing has the same problems as using Contractors. Let me explain.
In the short term, you save all kinds of money because the Contractors / Outsourcing firms will undercut established labor in order to get the business. As T is moving jobs from in house employees to third party solutions, they lose expertise in those areas.
Fast forward five years. T has outsourced and / or hired contractors for all positions it had targeted and either fired, laid off or lost via attrition all of its own employees who used to do the work.
This is where the fun starts.
The Contractors / Outsourcing firms now have all the knowledge and / or experience. . . . and they know it. They can now dictate the terms of how much it will cost T to perform the job they are doing today.
T, having laid off all of their experienced staff, now has no choice but to pay whatever is demanded of them or start hiring new employees AND training them ( which will take some time ) in order to get out from under the now very expensive third party labor they thought was such a great deal.
Then again, this may be the long term plan all along.
Fire, layoff and outsource everyone then rehire new folks years down the road as all low paid management whom they can hire / fire on a whim.
The work never returns from outsourced companies to AT&T. Apps that went to iBM 20 years ago are still IBM or are now TechM. New AT&T apps that replace outsourced apps eventually get outsourced to save cost. Outsourced apps are functional but aren't robust. Staff turnover at these outsourced companies is high. The best of the offshore staff leave in a year, every year.
the amount of actual work is reducing YOY, so, yes it is sustainable and the number of resources required to do the actual work is substantially lower. and i mean WAY lower than today. 60-70% cut would be no problem
Microsoft stopped their outsourcing and started rehiring employees. The outsourcing did not fare well at Microsoft. I suspected in a decade or so AT&T would realize the same if of course there still will be AT&T. The funny thing will be if T-Mobile ends up purchasing AT&T.
There was a big organization in my town that outsourced all of their IT to a company that eventually offshored many of those jobs. The arrangement lasted about 10 years. Then they decided to bring their IT back in house and hire local people again. These things go in waves.
This might not last forever but T is in a position now where they have to cut costs
Oh it will look great on paper.
Who thinks long term?! Decisions are made about the now; not the future.