Last year, Ofcom announced that 9% of households were finding it difficult to afford their broadband service and 7% were struggling to afford mobile services. Across the telecoms industry, the rising cost of living, soaring energy prices, and the increasing commoditisation of business are leading to smaller margins and decreasing Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA). This growing storm means that if telcos want to remain competitive, it’s more important than ever to get their workforces ‘Future Fit’ to drive efficiency and cost savings.
The Gathering Storm Facing Telcos
While over the past ten years, massive capital investments have been made in next-generation networks like 5G and fibre optic broadband, the scale of this investment is set to fall rapidly in the coming years as market dynamics change. Across Western Europe, annual investments in fibre rollout are set to hit their peak in 2024 at around €25 billion. However, by 2030, this figure will fall by over half to €9 billion per year, according to projections.
At the same time, the costs of financing and maintaining these critical network investments have increased with rising interest rates and energy costs.
The result is downward pressure on margins and top-line revenue, making cost control and workforce efficiency urgent priorities. Telecoms face dual challenges of declining legacy service revenue and peaking next-generation network investments converging in the next few years. This requires decisive action to become leaner, become more agile, and waste no resources if competitive positions and profitability are to be maintained.
Transforming operations to use automation, enhancing productivity and reallocating human capital to the most value-adding activities, will be what separates the leading telcos of the future from those struggling to survive in this changing landscape.
Why Telcos Must Take Decisive Action
Omdia calculates that only one in 10 telcos have reduced their operational expenditure (opex) over revenue in the last decade. Reaching the level of cost savings that these companies are seeking will require swift, decisive action across all areas of operations - improving efficiency via automation and AI, leveraging new technologies, and transforming workforces to align human talent with the highest value activities.
Telcos will need to make structural changes to their operations and business models in addition to cost-cutting. Some telcos may exit certain markets or service lines that no longer provide attractive returns on investment in order to refocus their core strengths. Consolidation across the industry through mergers and acquisitions also seems increasingly likely.
Getting “Future Fit” - A 5 Step Plan
The following 5 steps form a framework to transform workforces and operations. This five step plan enables Communications Service Providers (CSPs) to get leaner, more agile, and more financially fit – all necessary characteristics for the digital era:
- Automation - Integrate automation into both business and network operations processes that deliver quantifiable value and address real pain points. This improves efficiency and frees up human capital This involves taking a good, long look at how new Digital, Automation, and AI technologies can be used – especially in operational and building areas.
- Knowledge Transfer - Capture institutional knowledge from experienced staff and make it easily available for new hires to prevent its loss from retirement and attrition. This is especially true for old applications being moved to the cloud.
- Commercial Knowledge - Ensure all automation and modernisation investments are cost-justified and will contribute to lower operational expenditures. The starting point should be, “How does this save us money?”; not, “Why is this a fun technology to play with?”
- Incorporate New Networks - Account for reduced fault rates in fibre and 5G operations into workforce planning and processes. Openreach sees 70-80% fewer faults on fibre vs. legacy copper. Legacy telecoms companies can be a lot more aggressive with their efficiency drives.
- Workforce Transformation - Construct comprehensive workforce plans based on rigorous data analysis of current and future skills. This makes it easier to align staff with strategic growth areas.
Making it Happen
Executing an effective workforce and operational transformation requires business leaders to clearly communicate the rationale and process for change on an ongoing basis. They must paint a compelling vision, explaining why evolution is urgently needed even amidst solid company performance and what the future may bring if they fail to adapt proactively.
To unlock the full potential of technology infrastructure upgrades, departments must work together. This means collaboration between Human Resources, network planning, product development, finance, and executives to align all programs. This way, they can create integrated plans to optimise staffing, upskill talent, and redesign processes to be ready as capabilities come online.
Embracing experience outside the telecoms industry can provide fresh perspectives too. Telecoms can look to digital native companies or even manufacturers who have gone through large-scale agile transformations for insights they bring from those journeys.
The Time to Act is Now
It’s imperative to get “Future Fit” today. For telcos looking to maintain their competitive edge, this isn’t just about future prosperity; it’s also about survival.
The same market trends and technologies that pose threats are also the ones that offer opportunities. So, how do firms set themselves up to seize these opportunities? By implementing comprehensive automation, moving knowledge and skills to align with modern network architectures, and doubling down on developing the value-add solutions most essential to end-user needs. That’s how telcos can stay integral to increasingly digital societies while achieving sustainable financial fitness.
The choices telcos’ executive teams make today around strategic direction, costs, technological integration, and critical workforce planning will determine who sinks or swims through the mounting challenges ahead. Transformation may be complex in the short term, but when properly enacted, it means a more agile workforce. The time for the telecoms industry to act is now.
If you’d like to know more about workforce transformation, take a moment to get in touch and arrange a 45-minute consultation.