Harsh contracting conditions stifle FM outsourcing in Telcos- Akintunde

Both operational and non operational assets are used in the delivery of telecommunication services. The operational assets include things in the base stations like the towers, masts, and basically all telecommunication equipments used in sending and receiving signals which are in line with their core business. However, these assets are located within an environment with buildings that have to be serviced. Indirect assets like the building and things in it, for example, air conditioners, lifts, generators etc are to be maintained by facilities managers.

In an interview with BusinessDay about why the telecoms operators in Nigeria engage in in-house management of their non operational assets rather than outsourcing the management duties to Facilities management (FM) companies, Femi Akintunde, MD/CEO of Alphamead Facilities said;

“When you set unrealistic targets that is unachievable and all you want to put there is penalty. It has taken us up to 5-6 years to decide to come and play in the telecoms sector. We have always moved away from telecoms business over the years because every time we attempt to work in that space, what we see are very harsh contracting conditions under which it is very difficult to succeed. Their contracts never contain incentives instead they are full of penalties from top to bottom. How do you want to see yourself as a partner with those conditions? From the day you are entering into the contract, you are going with arms and ammunition because you need to defend your margin and survive and that should not be the case.”

Telecoms companies know where to get the best in class on how to operate a telecommunication facility but not how to ensure the lifts in their workplace work best or how to ensure its premises, electrical services, plumbing services are best maintained. These non operational facilities create the enabling physical environment for staff to deliver their best and if they are not well provided and maintained and if there is a power outage in a building due to poor maintenance, it will lead to loss of productivity. If the AC doesn’t work properly, people would not be comfortable, human factor engineering sets in and it leads to irritation, you cannot power your system, the server will be down. While this is not core, it is critical to the success and continuous operation of your facility.

According to Akintunde, “telecom operators need to focus more on their core business of providing quality telecommunication services to customers rather than spending valuable resources maintaining and training in house facility management staff but this has not been the case because they are not ready to see FM companies as part of their business model and that is one thing that I see may be affecting the telecom industry.”

Other industries such as the oil and gas sector and banking industry in Nigeria have been outsourcing their facilities management for many years to focus on their main business. However, the telecom industry has not been very receptive to the idea of outsourcing facilities management which is said to be as a result of their harsh contracting conditions and short tenure of contracts with Facilities management companies.

When asked why telecom companies are not outsourcing facilities management, Akintunde said; “In developed countries, the minimum contract tenure is 5-10 years. Having a 10 year contract does not mean there will not be room to disengage and that is where Nigerian companies miss in the outsourcing model. Some even make it a one year contract and for FM outsourcing in telecoms, it takes nothing less than 6-9 months to settle down and understand the business of each other. So when you have a one year contract and the first 6-7 months is used in trying to understand each other and the condition of the facilities you want to manage, before I open my eyes, the contract is over and then we start tendering all over again and it takes effort and resources to tender and it doesn’t engender partnership.”

Adding that there is currently only one telecoms operator in Nigeria outsourcing FM and when other telecoms companies are ready reap the benefit of these services, they need to “take a closer look at the contract structure, the philosophy, the companies they’re dealing with, the competitiveness, the capacity in the environment and the opportunity for those people to make profit and build capacity through investment of telecoms.”

 JUMOKE AKIYODE