1.case study aegis-mridul- case stdy competition - participation

Aegis

MANAGEMENT-CASE:

INNOVATION MANAGEMENTCASE
CASE-TITLE:

AEGIS: EMERGING COMPETITIVE AND INNOVATIVE STRATEGIES IN
TELECOM & OUTSOURCING INDUSTRY

Case Study | Outsourcing | Telecom | Innovation Management Please

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Aegis: Emerging Competitive and Innovative Strategies in Telecom & Outsourcing Industry

Aegis

Aegis:
Emerging Competitive and Innovative Strategies in Telecom & Outsourcing Industry

- A study of Cutting Edge Technologies & Communication Tools in AEGIS
TELECOM & BPO




Aegis

AREAS of RESEARCH: TELECOM & BPO
CASE OBJECTIVE:

ACKNOWLEDGEMENTS:

I wish to express my profound thanks to Prof. Kunal Gaurav for giving me this wonderful opportunity.




C o mpa n y: A egis

DHRUVA CASE COMPETITION 2012
This case contains 15 pages. Submission date: Dec 03, 2012.
A MANAGEMENTCASE WRITTEN FOR
CLASS-ROOM

TEACHING &DISCUSSION

Case Study | Outsourcing | Telecom | Innovation Management

Please consider the environment before printing


Aegi s

• CASE WRITTEN IN ASSOCIATION WITH
AEGIS, an ESSAR GROUP COMPANY




Aegis

AUTHOR
PROFILE
Mridul Arora

Mridul Arora is an MBA in Finance from ICFAI
Business School, Kolkata, ICFAI University and a
BBA (Hons.) from Jadavpur University. He has been
an active participant and winner in Corporate Quiz
Competitions conducted by Colleges and Corporates.
He has authored research papers on “Business
Intelligence, Competitive Intelligence, Analytics,
Knowledge Management and IFRS” (2012) in IIM
Calcutta and IBS Hyderabad. Mridul has worked in
reputed organizations like Allahabad Bank and IBM
Global Services. He is also a keen participant in
MDPs,
EEPs, Workshops and International
Conferences and is passionate to learn and unlearn
new trends in industry by applying innovative
concepts, contemporary research tools and modern
analytical techniques. Presently, the author is a
corporate professional working at Deloitte, Hyderabad
as a Tax Consultant.

Last Edited – Dec-03-2012

Aegis: Emerging Competitive and Innovative Strategies
By Mridul

Arora

Welcome to this innovative Aegis case study dealing with Innovation Management.
People, process, and technology are the foundations for growth. Although the transition to
a new service process involves change management, a cooperative process can minimize
complications to a business and lay the foundation for a solid future.
INNOVATION, CREATIVITY & IMAGINATION first entered the corporate world and
boardroom in the 1940s and 1950s by ALEX OSBORN, Co-founder of Advertisting
agency-BBD & O. In 1960s, Edward De Bono, a British neurologist, introduced the
concept of “LATERAL THINKING”. Mr. Steve Jobs articulated the concept as follows:
“Innovation has nothing to do with how many R&D dollars you have. When Apple came
up with the Mac, IBM was spending at least 100 times more on R&D. It's not about
money. It's about the people you have, how you're led, and how much you get it.” With
innovation comes growth, and with growth comes opportunities … opportunities for
success … opportunities to develop future leaders. Listening to clients, market, and to
each other will spur our next innovation. Ask questions of your colleagues. Ask clients
about their challenges. And pay close attention in meetings. I have learned through the
years to execute upon a “rule of three.” If I hear the same challenge or request from three
different sources, that tells me there may be room for innovation and growth in that area
in a continual pursuit to be the best. Not all ideas pan out; some ideas are more
challenging than others to implement. Some require leadership, others require change
management. The point here is to make innovation part of your daily life and be
passionate about the ideas that you think can make a difference.




Introduction : The Right Process
“Many businesses fail to meet their growth goals because it is difficult for senior managers to
break free of their mental paradigms and existing strategic boundaries.”
-Bob La Perle, GM & VP, Kodak.com

The reason why certain enterprises perform better than the rest is that these enterprises adopt
consummate strategic and marketing policies and vertical marketing systems (See Exhibit-7)
which provide them with a large consumer base. This is where international business strategy and
marketing modules come in handy. Some enterprises are taking a slow, steady approach by
adopting mobile wireless 3G and 4G technology to do what they’ve always done more effectively.
Others are using mobile to jumpstart transformative changes in their business or operating models,
doing fundamentally different things.
In this case, we have set out the findings from the CEO interviews of Aegis, a Multinational
Corporation in a range of offerings in BPO and KPO Services. It illustrates the strategic priorities
and talent issues faced by the company. We address the challenges, complexities and responses
which Aegis encounters. This requires understanding the broad business, talent objectives and
assisting in the integration of an international experience in global competency development to
have the right people, in the right jobs, in the right locations.




INNOVATION | MANAGEMENT

The Late Dhirubhai Ambani dreamt of a digital disruption in India — an India where the common
man would have access to affordable means of information and communication. Dhirubhai, who
single-handedly built India‘s largest private sector company virtually from scratch, had stated as
early as 1999: ―Make the tools of information and communication available to people at an
affordable cost. They will overcome the handicaps of illiteracy and lack of mobility. Most of the
contemporary enterprises are engaged in a “rat race”. The challenge is to think out of the box and
devise strategies which will enable an organization to operate efficiently and remain a step ahead
of business rivals. At the same time, a company must market its products in an efficient fashion.
Resourceful marketing enables a company to reach out to the masses who are the ultimate
consumers of the product.

From a leadership development perspective, people learn primarily through experience. But
seldom do organizations have the systems, tools and culture needed to create the kind of stretch
assignments and other developmental experiences that facilitate real growth. Networking, Formal
Learning, and Technology-assisted developments are critical to make smart moves that meet
current business and future developmental needs.
The problem with the telecom industry is in their infrastructure and network coverage. It has been
recognized that the telecom industry’s health depends on lowering service provider operational
expenses as well their capital expenditures. Telecom vendors have made significant efforts to
address this need and telecom company vendors have also taken this issue seriously with data
traffic rising rapidly, revenues from data traffic were growing at one-seventh this rate, and costs
associated with data traffic were growing faster than revenues. In many organizations, mobile
initiatives are popping up in almost every business unit, department and region. Some are pushing
existing solutions and process benchmarks from the web and desktop to the innovative devices like
Smartphones, Blackberry, Android, iPhones and Cloud Computing Platforms. Others are
reimagining their business without location constraints.




THE EMERGING TELECOM AND GLOBAL OUTSOURCING INDUSTRY DYNAMICS:
A COMPETITIVE LANDSCAPE
The booming telecom market has been attracting huge amounts of investment which is likely to
accelerate with the entry of new players and the launch of new services. Communication service
providers are shifting from traditional voice and data services to being players in
telecommunications, media, entertainment and the IT sphere. Greater penetration of new services,
availability of relatively inexpensive and feature- rich handsets, consumer education and
values have forced the industry to measure Average Profit Per User and Customer Lifetime
Value as rigorously as they do Average Revenue Per User. This is achieved by outsourcing
services like sales, order management, postpaid billing, provisioning and customer management,
resulting in reduction in operating expenses, maximization of revenues, increased agility in go-tomarket plans, and improved customer retention and loyalty.(See Exhibit-2)
Outsourcing continues to “go mainstream”, becoming another standard business practice that
should be evaluated as business needs mandate. The outsourcing market continues to confuse
outsourcing with offshoring.
Many respondents still see the two processes as inseparable — even though many times outsourced
work never leaves the originating country. Information Technology, Finance and Human
Resources continue to lead other business processes in outsourcing, though all business processes
are expecting to see increases in the use of outsourcing and offshoring in the near future.
Insourcing, though rare, does occur. We are beginning to see more clients contemplating insourcing
functions due to vendor non-performance or changes in business strategy.

1. Globalization Effect: With opening up of trade and commerce across different countries in the
world, opportunities are becoming plentiful.





Currently, Telecom and Outsourcing Industry is facing the following challenges:

2. India’s advantage: Liberalization of our Indian government coupled with talented manpower is
successful in making India as the best destination for other countries to shop for outsourcing
business.
3. Threat from other countries: Current advantages of India will not be guaranteed for years to
come. We have many countries in the competition, not to forget giant China.
.
4. Impact of U.S. economy: As majority of outsourcing business is coming from US, certainly US
economic health is of critical importance. US economy condition will have direct bearing on the
financials of IT services companies.
5. Sustaining of Quality: in products and services offered by Indian BPO (See Exhibit-4)
companies is of paramount importance in the light of stiff competition offered by other countries.
Quality is the moola mantra for any ITES/BPO/KPO company, without which it cannot exist.
Typical challenges in the industry are
1. Financial Austerities: Companies have resorted to different mechanisms of cost cutting such
as pruning of human resources, bench cost, travel cost etc..
2. Looking for optimal utilization of human resources : All resources should be billable. This
means freshers should be billable from day one.

3. Reducing bench cost: Keeping of reserve talent pool is done away with.




THE DISRUPTIVE AEGIS MODEL FAILS AFTER PILOT TESTING:
GROWING SWEET & SOUR





In our experience, skill, knowledge
and responsiveness, blended with
individual style and character, create
the chemistry vital to Strategic
relationships – our delivery model.
The high average call handling
times (AHT) has significantly
impacted customer satisfaction score
across the globe. This has led Aegis
to lose11% more contracts in 201112 than 2010-11. Aegis had to write
off a huge decline in the value of
foreign investments due to the
slump in the global telecom and
outsourcing market post 2008. In
2008, Aegis had roped in with the

leading US-based media company AOL
but had to bring about a number of
other strategies to wake up to the
challenges of the “new” economy post
recession. Aegis announced that its
commitment towards globalization was
intact. It decided to focus more on
Indian Business. Innovation at Aegis is
quite remarkable.

term client relationship ranging over
five years.
Since inception this engagement model
(see Exhibit-6) has transformed from a
“productive hours” model to a
“delivered hours” model, showcasing
the client’s confidence in Aegis’ ability
to effectively manage its end user
experience. Aegis has been able to meet
the client’s quality and experience
metrics such as “Voice of Customer”
(VOC), Voice of Employee (VOE),
Customer-satisfaction (C-SAT), and
issue resolution1.
.


The Co-creation business model
construct of Aegis is
externally
oriented
and
illuminate
the
relationships that the firm has with
the various actors in its value
network. With deep domain
expertise to synchronize their
onshore in-house processes with
outsourced offshore centers to
provide scalability and flexibility.
This synergy would enable them to
restructure and consolidate the UK
and US based captive operations.
The client chose Aegis as its partner
to provide inbound customer service
for contract airtime and pre-paid
mobile customers .Aegis has a long-

Teaching Footnotes
1.

VOC, VOE and C-SAT are the parameters used to
judge the efficiency of outsourcing agents.

where it is cheaper to do so or at a place
that has unutilized capacity or skills.
The comprehensive and holistic
alliances and memberships of
Aegis addressed the three pillars
of sustainability: People, Process
and Technology (See Exhibit-1).
In Aegis, the work can be
moved anywhere allowing for a
degree of freedom depending on

A capability gap is the difference
between the ability of existing systems to
meet operational requirements and of
what's expected of it. Capability gaps
may occur due to: Faulty recruitment
procedures, Inability to connect to
sustain & scale up the existing capability
by providing the right number of people.



INNOVATION | MANAGEM


The two main ways in which a
capability gap can be spotted
are:
1.Competency Mapping
2.SWOT Analysis

Aegis capitalizes on the of TEAM
(Together Everyone Achieves More).It
makes use of agile methodologies like
Lean Six Sigma, Flexible and ZeroBase Budgeting, CSAT, AHT, Hall
of Fame Awards and Annual Award
Distribution Ceremonies to reward its
top performers. After
running
successfully for close to 30 years,
Aegis got into trouble by 2008
recession. Post recession, the business
scenario in the US had changed
considerably. Aegis had to contend with
the onslaught of other giants like GE,

Genpact, Wipro and Infosys. Over the past
decade, the Indian economy experienced rapid
growth with the ingress of MNCs and became
the hub of outsourcing services. Between 2008
and 2011, a turnaround was orchestrated at
Aegis by its Global MD and CEO, Aparup
Sengupta. In Philippines, Aegis had a
monopolistic situation but now a lot of
competitors were coming up. Aegis took a
position-of quality, not price. Post 2008,
Telecom and Outsourcing contributed 5.5% to
the GDP and generated 2 million employment
opportunities. After 2008 global financial crisis,
Aegis had an impact on its profitability as
various sectors of the economy like automobile,
banking, real estate and software industries were
affected.
st

Aegis realized that in 21 century, a company
needs to change its outlook, particularly in
context to application of Information Technology
in business processes




The Product is a full-featured call management service that supports multiple
extensions, several call handling options, and voice mail. When a customer
establishes an account, he or she is granted a personal extension number that can be
assigned to a specific telephone number such as a home, office, or cellular number.
By giving others the extension number, in conjunction with the directReach™ tollfree number, the customer is able to receive phone calls and engage in totally
private, anonymous telephone conversations.



AEGIS still relied on some old fashioned Information Systems. This thought of
major technological change became even more deeply ingrained in the CEOs’ mind
when he met a software vendor at a social event. The vendor promised him some
customized solutions that would help integrate the company’s data. AEGIS had two
primary units: an outbound telemarketing unit and an inbound catalogue sales unit.
These units operated independently of each other. AEGIS has plans to integrate
these units, which required a significant amount of integration of the relevant data
and information. Along with this, the company is also planning some significant
growth strategies, where it planned to increase its call center to 200 from the
current number of 10.
New open-switching system was to be implemented in the new setup. This will
enable automatic redialing and call forwarding. Plans were also in place to
implement new human resources and ledger software. The vendor assured the CEO
that building of data warehouse would be the company’s solution for effectively
managing its expansion plans and the new software. . Employing a sophisticated
switching system and proprietary software, the Product will enable customers to
receive telephone calls on any designated telephone line, through a toll-free number
and private extension. The Product provides three important benefits that address
the target end user's needs: privacy, flexibility, and convenience

Aegis

The service is fully customizable, allowing the customer to configure the service to meet his or her
unique needs. The user controls all Product features through a complete management system on the Web
or through an easy to use Interactive Voice Response (IVR) telephone interface. Through this control
system, the customer can easily:
• Register and activate the product using a credit card
• Specify the receiving number, and modify that number at any time
• Program different receiving numbers for different times
• Terminate an extension and obtain new extensions
• Customize voice mail and check for new messages
• Review account usage and change monthly calling plans
As a prevalent norm that a data warehouse and Customer Relationship Management (CRM) software
achieve profitability, the Board of Directors in a meeting agenda (see Exhibit-11) gave the permission to
the CEO to run a pilot project in the Corporate Headquarters at Mumbai. Convinced by the Board, the
CEO decided to go forward with the idea. He allocated a budget of Rs. 250000, and plan was to
implement a 500GB data warehouse in all the centers and offices of Aegis to keep a master track record
of all the clients and calling customers. Since most of the internal staff was not comfortable with
other Information Systems (IS) projects, some new personnel, such as a manager of the data
warehousing projects and as an Management Information Systems (MIS) director, were hired outside
the company. The time span given was approximately four months. An initial project team was
assembled, consisting of the MIS director, the project manager, and couple of users, among others. The
project manager attempted to push back the deadline, to make the project more realistic, but the CEO
was insistent of staying with the original plan. Ultimately, the CEO agreed to the implementation of a
pilot project after five months, before the role out of the actual data warehouse. Although the CEO
envisioned the Nonetheless, the project team remained optimistic and started the second phase for the
project, namely the scheduled lengthy interviews with potential users throughout the organization and
asked them to talk in depth about their job requirements, day to day activities, technology
needs, and so on. Hence the user requirement phase was relatively long (about three months).
The project team members also focused on defining the business dimensions, attributes,
relationships, and so on, for the design of the data warehouse.

Aegis

Since these were multiple departments, there were many conflicting needs and definitions, all of which
needed to be integrated. At the end of this stage, the project team realized that individual units’ business
requirements were too inconsistent. All of the business managers had their own customized
spreadsheets, which they used to create their respective reports. These individual spreadsheets were
based on the managements’ own sets of assumptions and had no synergy with each other. The project
team had to invest enormous time just sorting through these inconsistencies. This further delayed the
project, which was not expected earlier. To add more trouble, the team also realized that there were no
appropriate data to enter into the data warehouse. Some of the data were legacy data, and extraction of
these data will be a costly affair for the team.

The possible alternative solutions are:
•

Look for avenues even in the Small and Medium Enterprise (SME) areas.

•

Increase Investments purposely to keep shareholders attracted and gain their confidence in
the company by bringing waves of technological innovation

•

No Increment for the current financial year for the employees

•

Employees to be called back from sites in U.S.A. to upgrade the systems on the ten existing call
centers to open technology systems.

•

To layoff 10 percent of the workforce and cut executive salaries
Aegis projected revenues of $12 million in its first year of operation, growing to $48 million by
year five. Cost of goods sold was calculated on a per-minute basis and included all services
associated with buying, selling, and billing the customer for calls, as well as credit card fees.
Gross margins were projected to be around 61%, while operating margins—after advertising,
promotion, O &M and G&A costs—were projected to be around 43%. Net income was projected
to be $5 million in the first year, growing to $21 million by year five.

Aegis

The person receiving the phone call incurred the charge for the call, based on a rate plan that varied by usage level:
Plan
Registration only
Basic subscription
Premium subscription

Expected Usage Monthly Fee Charge per Additional Minute Free Monthly Minutes
Trial

$6.95

$.79

0 minutes

Middle

$14.95

$.69

20 minutes

High

$29.95

$.59

45 minutes

The per-minute prices were higher than the cost of standard long distance services, but
approximately the same as other enhanced phone services, such as local collect calls, which
ranged in cost between $.35 and $.70 per minute depending on the length of the call, plus a percall connection charge.


The existing IS department refused to cooperate with the team, since they were threatened by the
data warehousing project and viewed it as reducing their importance to the organization.
The data warehousing team attempted to salvage the situation by gathering some data from
existing reports and manually entering them into pilot data warehouse. However, they still
knew that without significant changes to the existing systems, the actual data warehouse
could not be implemented, yet plans for the pilot went ahead as scheduled. When the pilot data
ware house was finally installed, the situation became even worse. The users refused to use it,
claiming that it did not add anything to their existing capabilities and was difficult to use.
Instead, of the originally planned five months, the pilot development and installation had taken
over eight months. In addition, it incurred an estimated cost of Rs. 750, 000, significantly higher
than the CEO’s budget (see Exhibit-9 & 10). At the time the pilot failed, there were some
structural changes in the organization as well, including new directors of MIS and technology.
The data warehousing project manager built a new plan that estimated that the data
warehousing project could be delivered within two years. However, by this time most of the
company executives, including the CEO, had grown tired of it, and the project was officially
closed within a short period of time.

Aegis

Summary and Conclusions
In Aegis’ case, they articulated the opportunity to evolve to a very different telecom industry
structure, one that involved a growing diversity of handset manufacturers and application
developers driving distributed innovation in smartphone technology. In forming its view of the
telecom industry, Aegis recognized the importance of orchestrating a robust and diverse
ecosystem.
The final element of a shaping strategy, the shaper’s acts and assets, help overcome the natural
skepticism that potential participants might have in times of high uncertainty. These acts and
assets are designed to strengthen credibility by demonstrating the shaper’s commitment and
capability to achieving the shaping view and supporting the shaping platform. In a shaping
strategy, these three elements reinforce each other, helping the shaper mobilize a large number of
participants, build critical mass quickly (a key challenge for any platform strategy), and achieve
increasing returns for all. In times of growing pressure, shaping strategies are particularly
attractive because they are highly leveraged, inviting many other participants to share in the
investment and catalyzing a powerful form of distributed innovation where participants learn
faster by working together. As for Aegis, by creatively combining telecom and wireless
resources, the firm has emerged as a global telecommunication power. Telecom is not the only
industry that has seen a successful shaping strategy. Early examples of successful shapers using
positive incentives include Malcolm McLean’s efforts to evangelize containerized shipping in
the 1950s and 1960s, Visa in the financial services arena in the 1970s, Li & Fung in the apparel
industry in the 1980s, and Microsoft in the technology industry in the 1980s and 1990s. And
today, shaping strategies have broader application than ever before. From Facebook’s social
network platform that redefines how people connect online to Spotify’s reshaping of the music
industry, today’s digital infrastructure makes it easier to mobilize and coordinate the activities of
much larger numbers of participants than ever before. The growing gap between digital
technology performance and the much more modest growth of business productivity has also
created both greater potential for business disruption and an upside in rewards that will accrue to
successful shapers. More opportunity, more rewards, and more capabilities create compelling
incentives for executives to adopt shaping strategies today.
In closing, I’ll again draw again upon Mr. Jobs: “Innovation distinguishes between a leader and a
follower.”

Aegis

References & Background

1.

So What is Strategy? – Roger Evered (1983)

The Strategy Concept: Five Ps of Strategy –
Mintzberg (1987)
2.
3.

What is Strategy? – Michael E. Porter (1996)

4.
The Search for Strategy – Gary Hamel
(1997)

What is Strategy and does it Matter? –
Richard Wittington (2001)
5.

Strategy as Simple Rules – Eisenhardt

6.

(2001)
The Oxford Handbook of Strategy –
Faulkner/Cambell (2003)
7.

8.

What is Strategy? – Deepak K Sinha (2003)

What is Strategy and How do You Know if
You Have One? – Costas Markdes (2004)
9.

Can You Say What your Strategy is? –
Collis/Rukstad (2008)
10.

Good Strategy/Bad Strategy – Richard
Rumelt (2011)
11.

Annexures & Exhibits

Exhibit-1: IMPACT OF
TECHNOLOGY


Source: AEGIS PRIMARY DATA

Exhibit-3: STAKEHOLDER SATISFACTION MATRIX

Exhibit-4: INDIAN BPO MKT.

*All figures converted to Dollars at 1 Euro = 1.95583 Dollars

Exhibit-6: ENGAGEMENT DRIVERS

Exhibit-7: VERTICAL MKT SYSTEMS

Exhibit-8: PROCESS BENCHMARKING FOLLOWED BY AEGIS

Exhibit-9: CHARGES FOR INSTALLING THE DW/INNOVATIVE INFRASTRUCTURE

Exhibit-10: BUDGET EXCEEDING THE
CEO ESTIMATES

US$ Cost per
FTE
(Full Time
Employee)

United
States

India

India as
of US
costs

Personnel

42,927

6,179

14%

G&A
Expense

8,571

1,000

12%

Telecom

1,500

2,328

155%

Property
Rentals

2,600

847

33%

Depreciation

3,000

1,500

50%

58,598

11,854

20%

TOTAL
EXPENSES



%

Exhibit-11: MEETING MINUTES AND AGENDA- AEGIS



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