Benchmarking of Indian mobile telecom operators using DEA with sensitivity analysis

Abstract

Purpose

The purpose of this paper is to benchmark the Indian mobile telecommunication service providers for relative efficiencies. In this paper, a method for benchmarking performance of mobile telecom utilities based on data envelopment analysis (DEA) is presented. The paper discusses some concepts between quality performance and benchmarking and the results include performance efficiency and sensitivity‐based classification of utilities. Also, peer‐to‐peer comparison of inefficient with efficient utilities is provided. Based on these results, inefficient utilities can develop strategic plans to improve performance.

Design/methodology/approach

The authors use DEA to measure comparative efficiencies of mobile telecom companies and two different DEA models, CCR and BCC, were applied to evaluate the relative efficiency of mobile telecom operators in India. Sensitivity‐based classification of utilities is carried out by removing one or more inputs or outputs from the base model to construct a new DEA model. Comparisons of DEA efficiencies from the base model with the structurally perturbed models show the impact on efficiency. Data include annual and quarterly reports showing various quality parameters.

Findings

DEA is used to derive the benchmarks based on the comparison of the 126 utilities which include public sector undertaking (PSU) operators (MTNL and BSNL) and private operators of the Indian mobile telecommunication sector. The result includes performance efficiency and peer‐to‐peer comparison of inefficient utilities with efficient utilities. Based on these results, inefficient utilities can develop strategic plans to improve their performance. Sensitivity analysis, based on removal of one or more variables from the base model to determine changes in DEA efficiencies is done for selecting the strength of parameters of utilities for performance improvement.

Practical implications

Benchmarking of service utilities in the telecom sector is virtually non‐existent at the national level in India. This research identifies the different variables and then a model is prepared for benchmarking of the service providers in India. Based on the efficiency analysis, benchmarks can be set, and utility efficiency scores can be obtained based on the set benchmarks. These scores can help develop a strategic plan for mitigating the factors that contribute to the system inefficiencies.

Originality/value

This paper is one of the few published studies that benchmark the performance of mobile telecom services in India. This research promises to be amongst the first of the works carried out taking specific parameters of mobile telecom utilities of India.

Citation

Nigam, V., Thakur, T., Sethi, V.K. and Singh, R.P. (2012), "Benchmarking of Indian mobile telecom operators using DEA with sensitivity analysis", Benchmarking: An International Journal, Vol. 19 No. 2, pp. 219-238. https://doi.org/10.1108/14635771211224545