Media - Industry News

CORPORATE ALTRUISM MAY NOT BE ENOUGH TO ENSURE DIVERSITY BY MARVIN V. GREENE

June 1, 2003 - SuperComm Daily News

Corporate altruism, as a means of ensuring inclusion for smaller or disadvantaged companies in the telecommunications financial pie, won't fly in a stubbornly recovering industry, a consultant told the opening session of the SUPERCOMM Supplier Diversity Summit.

Victor Edozien, a principal with the Asaba Group, told attendees that MWDVBE (Minority, Women and Disabled Veteran Business Enterprises) suppliers are no longer enjoying unfettered access to industry business just because it is the right thing to do. As carriers and service providers continue to slash capital and operating expenses, they are unable to steer business to MWDVBE firms as they may have in the past, he said.

"There has been a dramatic drop in capital expenditures, particularly by service providers, Edozien said. "The industry today has a greater focus today on reducing operating expenses."

Growth for capital expenditures will be flat for the years 2003 to 2007, Edozien said. From 2001 to 2002, industry capital spending dropped by more than half. However, during hard times, what MWDVBEs need is meaningful access to business opportunities, he said. That way, they become value equipment manufacturers and service providers. Edozien urged the industry to shift from simply creating access to creating bid lists and letting go the concept of corporate altruism in exchange for enhancing competitiveness.

Edozien's company prepared a study for the Joint Center for Political and Economic Studies, which was presented at the summit and reported on the challenges facing MWDVBE suppliers. The report, commissioned by the Telecommunications Industry Group, outlined several factors affecting MWDVBE's ability to receive telecom industry business. One of the key findings of the report revealed that the telecommunications slump has created more than $1 billion in lost revenues for MWDVBEs through bankruptcy.

As service providers seek to reduce operating expense, cost-reduction measures, such as outsourcing, bundling and offshore, have been the biggest detriment to MWDVBE revenues.

"Most MWDVBEs do not have the scale and/or scope to compete effectively with offshore competitors or take on large outsourced projects," according to the report. "For MWDVBEs, the difficult environment results in a shift to survival mode."

The report recommended that external supplier diversity development groups and advocacy organizations "reinvent" how they add value to corporations. Diversity stakeholders, meantime, should reinforce the linkage between supplier diversity and customer market opportunities.