1. Topic: Outsourcing (topic 6) Firm Selected: Student ID: 1011962 Henry Aronsson ES4C9 - Supply Chain Management Oral Presentation

2. Presentation Plan ES4C9 – Supply Chain Management Outsourcing - TalkTalk  Introduction to telecoms market and TalkTalk  TalkTalk outsourcing  TalkTalk’s outsourcing risks and how they could improve

3. Introduction ES4C9 – Supply Chain Management Outsourcing - TalkTalk Brief History of the Market  From 1912 GPO (government department) runs telecoms monopoly in UK  In 1981 GPO split into BT and The Post Office  Telecommunications Act of 1984 o Becomes British Telecommunications PLC o Abolished BT’s exclusive privilege of running telecommunications systems - allowing competition to enter the market 1 2

4. ES4C9 – Supply Chain Management Outsourcing - TalkTalk TalkTalk  Carphone Warehouse acquires Opal Telecom in 2002  2003 TalkTalk launches with a “guarantee” that its calls will be cheaper than BT  Launches broadband service in 2004  By late 2009 has 4.1 million customers o Buying out Pipex, Tele2, Freedom2surf, Nildram, AOL and Tiscali  2010 TalkTalk demerges from Carphone Warehouse  2012 launches YouView and TalkTalk Mobile 3 4 5

5. ES4C9 – Supply Chain Management Outsourcing - TalkTalk Key Stats, Market & Competitors  BT Group PLC, BSkyB, Virgin Media  BT Group largest – own majority of the UK network infrastructure  Most telephone & broadband customers  Virgin Media – leads “triple play” market with 2.9m customers  also leads in greatest number of fibre optic customers  Sky leads television services  Pre-tax profits: BT £2.4bn, Sky £1.2bn, Virgin Media £1.03bn, TalkTalk £122m  TalkTalk, the only company that isn’t the market leader in any of its service areas Customers 18m 10.5m 7.5m 4.3m Data from Mintel Oxygen (6) 7

6. ES4C9 – Supply Chain Management Outsourcing - TalkTalk A Quick Look at: Porter’s Five Forces Very Low Relatively Low Medium Very High

7. ES4C9 – Supply Chain Management Outsourcing - TalkTalk  IT Services  Data analysis, performance management, testing  Outsourced to India in 2009 – Tata, Patni – saved nearly 50% on operating costs by offshoring What Does TalkTalk Outsource?  Consumer Satisfaction Management  Outsourced to Anovo in 2007 8 9

8. ES4C9 – Supply Chain Management Outsourcing - TalkTalk  Customer Services  Until 2011 ran its own call center based in Waterford, Ireland o Outsourced to Transcom o 575 jobs cut and savings of 40% realised What Does TalkTalk Outsource?  Internal Processes  Deal struck with Wipro BPO  Finance and accounting, HR, supply chain management, data management ….. 10 11

9. ES4C9 – Supply Chain Management Outsourcing - TalkTalk  Product Management, Manufacturing & Repair  All Wi-Fi DSL & fiber optic routers manufacture is outsourced to D-Link Corporation What Does TalkTalk Outsource?  YouView boxes outsourced to Huawei o “Faced with increasing pressure to improve profit margins as well as other operational challenges brought by telecom industry value chain, more telecom operators worldwide tend to choose Huawei for network O&M outsourcing” 12 13

10. ES4C9 – Supply Chain Management Outsourcing - TalkTalk  Installation Technicians, Line Maintenance/Repairs  Varies by area – they also have their own technicians o Home broadband installation is outsourced to BT Openreach o Line repair outsourced to Openreach What Does TalkTalk Outsource?  ADSL broadband connections in some areas  Outsourced to BT Wholesale 14

11. ES4C9 – Supply Chain Management Outsourcing - TalkTalk Risk of Outsourcing for TalkTalk  TalkTalk reputation for poor customer service o Outsourcing result in loss of direct customer contact o Loss of control means quality is also out of their control  Loss of Core Activities o What don’t they outsource? o How are they any different from the next competitor? 15

12. ES4C9 – Supply Chain Management Outsourcing - TalkTalk Recommendations for TalkTalk  More vertical integration  BT is very highly vertically integrated, as is Virgin Media  Will allow more control and price determination  Consider re-insourcing customer support  Improve customer satisfaction e.g. RSA & Santander  If not outsourcing then stop offshoring

13. ES4C9 – Supply Chain Management Outsourcing - TalkTalk References 1.The Historical Development of BT, The BT Group 2010, Retrieved 12 th November 2013 from www.btplc.com/Thegroup/BTsHistory/History.htm www.btplc.com/Thegroup/BTsHistory/History.htm 2.EVANS, R., Privatisation Shares – How Have They Fared?, The Daily Telegraph, 18 th November 2011 3.RICHARDSON, T., Carphone Warehouse Buys Opal Telecom, The Register 6 th November 2002 4.Carphone Warehouse: Accusations Fly, 3 rd June 2003, The Register 5.Carphone Raises Profit Forecast, BBC News, 27 th November 2009, Retrieved 12 th November 2013 from: http://news.bbc.co.uk/1/hi/business/8382119.stm http://news.bbc.co.uk/1/hi/business/8382119.stm 6.Mintel Oxygen report, June 2010, Bundled Communication Services - UK - 7.TalkTalk gains 47,000 Fibre subs but only 5,000 new broadband customers, Recombu, Retrieved 13 th November 2013 from: http://recombu.com/digital/news/talktalk-47000- fibre-subs-5000-new-broadband-customers_M12407.htmlhttp://recombu.com/digital/news/talktalk-47000- fibre-subs-5000-new-broadband-customers_M12407.html 8.TalkTalk CIO Hails Merger Integration Success, Computer Weekly, 10 th June 2010, Retrieved 13 th November 2013 from: http://www.computerweekly.com/news/1280097143/TalkTal k-CIO-hails-merger-integration-success http://www.computerweekly.com/news/1280097143/TalkTal k-CIO-hails-merger-integration-success 9.Case Studies: TalkTalk United Kingdom: Customisation Cuts Costs for TalkTalk, ANOVO 10. ASTEAD, J., TalkTalk Waterford call centre sold for €500,000, The Independent, 24 th January 2013 11. UK Based Broadband and Voice Telephony Services Company TalkTalk Selects Wipro BPO as Strategic Partner, BLOOMBERG, Business Wire, 3 rd August 2011. 12. LANE, A., Router wars: TalkTalk opens a home front against BT, Sky and Virgin, 12 March 2011, Recombu 13. Outsourcing Solutions, Quotation extracted and retrieved on 14 th November 2013 from: http://www.huawei.com/uk/solutions/reduce-tco/hw-078686- outsourcingsolution.htm http://www.huawei.com/uk/solutions/reduce-tco/hw-078686- outsourcingsolution.htm 14. Hundreds report being let down by Openreach, BBC Watchdog, 30 th October 2013, Retrieved14th November 2013 from http://www.bbc.co.uk/programmes/b006mg74/features/bt- open-reach-customer-service http://www.bbc.co.uk/programmes/b006mg74/features/bt- open-reach-customer-service 15. DUNN, S., TalkTalk gets the Wooden Spoon award for worst customer service AGAIN, This Is Money, 11 TH January 2012

14. Questions ES4C9 – Supply Chain Management Outsourcing - TalkTalk