Telecom Expense Management : A Costly Affair

VoicenData Bureau
New Update

Telecommunication is a large portion of any enterprise

expense budget, often ranging between 4-10%. Mobile workforce is increasingly

shifting towards smartphones for features such as mobile emails, web browsing,

etc. This means that telecommunications spend is also on the rise, resulting in

more mobile traffic. Inconsistent policies across internal units have made

management of telecom expenses complex, costly, and labor intensive.


As different types of telecom technologies and platforms

proliferate, and as companies continuously use them to enhance business

productivity and efficiency, telecom cost management space is evolving as an

effective tool to help enterprises manage their telecom expenses.

According to industry sources, the attractive telecom expense

management (TEM) market, valued at approximately $600 mn in 2007, is forecasted

to grow at a CAGR of around 15% between 2006-2011, reaching $1 bn in 2011. The

enterprise segment accounts for 70% of the TEM business, with the carriers

segment accounting for the remaining 30%.


Consistent errors in telecom bills, complexities in vendors

invoices, expense leakages, inconsistent data formats, SOX challenges, etc, have

forced enterprises to outsource their TEM function to specialized BPOs. Managing

the entire TEM lifecycle for clients is even more challenging in all

streams-namely voice, data, and wireless services without unique advance


These days TEM has become an umbrella term for describing the

management of all communications related expenses of an enterprise, ranging from

fixed-line and wireless services to wireless broadband.

Business Model

The TEM BPO solution to enterprise consists of end-to-end telecom cost

management services. This includes, order & inventory management, ongoing

invoice and expense management, ongoing audits and cost optimization, usage

management, business intelligence and web reporting, wireless device management,

and end user support.


Talking about the model, Ranjit Narasimhan, president and

CEO, HCL Technologies BPO services says, "The model of TEM BPO solution works

for buyers as it effectively addresses the need for expense control to minimize

leakages, and help identify telecom devices that exist within the organization

due to frequent changes and multiple data formats."

"TEM BPO solutions eliminate problems related to rates and

charges that differ from those mentioned in the contract while also removing

burdens of receiving and responding to invoices. TEM solutions provided by BPOs

bring the needed visibility and transparency on enterprise telecom spends while

minimizing investments," he adds.

Telecom expense management solutions provided by BPOs bring

the needed visibility and transparency on enterprise telecom spends, while

minimizing investments

Ranjit Narasimhan, president & CEO, HCL Technologies

BPO Services

Irrespective of the scenario, cost management is always a

challenge and it is more so in the downturn, all expenses are micro-managed

and benefits are highlighted

Subramanya C, global CTO, Hinduja Global


With the introduction of newer generation handheld devices,

the scenario is all set to become even more complex

Gopal Devanahalli, VP & head, CME, Infosys BPO


Key areas where telecom cost management space has evolved

include all forms of mobility, such as cellphones, smartphones, wireless

laptops, and other handheld devices. Other key areas include increasing usage of

audio and videoconferencing, VoIP, etc.

Slowdown and TEM

In the current economic environment, 'cost optimization' is the key focus

area for enterprises worldwide. Telecom related expenses contribute to

substantial chunk of a company's IT budgets. Gartner estimates that a proper TEM

exercise can bring 15-35% savings on an enterprise's telecom expenses.

Being a non-core function, TEM has rarely been a key concern

area for the top management of most enterprises. Enterprises are increasingly in

search of a partner which would rationalize and regularize the overall telecom

spend vis-à-vis usage and providers.


Commenting on the importance of TEM in the current downturn,

Subramanya C, global CTO, Hinduja Global Solutions says, "Irrespective of the

scenario, cost management is always a challenge, and it is more so in the

downturn. All expenses are micro-managed and benefits are highlighted."

This trend will continue in the economic upturn too. Even in

an upturn, enterprises' appetite for cost savings in telecom budgets won't

diminish. When the economy starts booming, enterprises will definitely expand

their business, and it will result in more mergers, acquisitions, physical

expansions of existing facilities or expanding into new locations. This will in

turn further increase telecom complexity and generate high telecom bills. Thus

increasing the demand for TEM to help keep these bills under control.

Latest Trends

TEM is moving beyond a national market to a global market, from a simple

bill audit to managing end-to-end telecom lifecycle and from fixed to mobile and

so on. Clients expect service providers to offer them a global solution that has

the capability to audit invoices and read bills from different countries that

they are present in, and also provide a common language reporting.


The market is steadily moving from a licensed model to

managed services. Organizations are increasingly looking at engaging in an

outcome based or gain share model with service providers, to fund the cost of

processing and realize benefits.

Commenting about the emerging trends and business models,

Gopal Devanahalli, VP and head communications media and entertainment (CME),

Infosys BPO says, "Earlier work in the telecom cost management was crowded by

niche players. But we increasingly see a trend of big BPOs and telecom service

providers offering TEM services to their clients."

"We have seen major telcos partnering with TEM solution

providers for these services. This is an interesting scenario where telecom

service providers are not only providing services to clients, but are also

providing cost management against competitive carriers. This provides customers

an outcome based engagement model that allows enterprises to realize tangible

and committed benefits ," he adds.


Key Benefits

The benefits and scope of telecom cost management is directly proportional

to the size of the organization, the geographies it operates in, also the number

of industry segments it services. By creating a standardized system across the

enterprise, telecom expense management sets in place an efficient procure-to-pay

process for telecom services across all levels and units within the enterprise.

Talking about the key benefits of telecom cost management,

Devanahalli, says, "With the introduction of newer generation of handheld

devices which are fast becoming the norm for corporate communications, the

scenario is all set to become even more complex. In many respects, TEM has now

evolved into supply chain management for telecom services."

Speed Breakers

Most enterprise, today, have a global presence and finding a telecom cost

management provider who can provide services to meet their needs, for all these

markets, is the biggest challenge. The telecom cost management provider, should

be able to handle and read the telecom nuances of all these markets.

Why TEM?
Visibility: Understands and

controls the total cost of network services, including advanced budgeting

and forecasting analytics

Centrally managed telecom inventory and expense allows clients

to enforce policies and drive behavior

Optimize: Reduces the number of resources needed to manage expenses
and inventory, thus enabling better focus on core business objectives

"For an enterprise to manage and optimize their network, plan

the network strategy, and forecast spend-entails a lot of investment. "We are

seeing more and more enterprises choosing to partner with experienced providers

who can manage the entire requirements and provide them complete visibility to

their telecom spend," says Devenahalli.

Explaining the challenges, Narasimhan says, "There are four

major challenges associated with managing TEM. Firstly, the inventory and

invoice records are often scattered among multiple locations and it is difficult

for organizations to get it centralized. Secondly, telecom is a high change

environment that is constantly evolving technologies and changes in business

locations, tariffs, new VAS launch, and discount rates, etc. Therefore, it is

difficult for an organization to keep track of all the changes. Thirdly, data

from vendors' invoices is not normalized, making global review and analytics

difficult. Lastly, high volume of complex, detailed information requires

specific domain expertise to understand and manage it successfully, and telecom

is not the area of expertise for most enterprises."


The Indian market is not yet as mature as the US and the UK in the TEM

space. Enterprises in India have started understanding the benefits of TEM

solutions. In the current economic situation, BPOs observe a potent demand for

end-to-end TEM which can truly support enterprises with global locations. Large

and mid-sized enterprises are increasingly considering it important to control


There would be a continued growth in the demand for TEM

solutions as hosted or managed service offerings. BPOs believe that with some

pioneering cases of cost-saving achieved, it will establish the actual need and

acceptance of TEM as a solution in the market. Overall, the awareness and

adoption of TEM in India is on the rise, and a substantial traction is expected

as we move forward.

Arpita Prem