With the total subscriber base across all telecom operators
crossing the 500 million mark and over 10 million subscribers being
added every month, the Indian telecom market is one of the fastest
growing markets in the world. But behind this fascinating growth is
a story of pain that will increase further as more operators enter
the fray, and launch price wars that analysts term as the
‘race to the bottom.’
As part of a strategy to garner market share, new operators such as
Tata Teleservices have launched aggressive plans such as the
one-paisa-per-second call plan. This has forced other operators to
counterattack with their own reduced tariff plans. The net effect
on the industry—sharp erosion in profitability and a huge
decline in earnings.
From these trends, it is clear that voice-based traffic (from which
telecom operators currently derive a majority of revenue) is on a
downward trajectory. Operators will clearly need to find out more
about their end customers—rather than just concentrate on
adding them to their networks. As customer stickiness is low,
enterprises in the telecom sector will invest in tools such as CRM
and Business Intelligence to gather more intelligence about the end
customer.
|
ANALYST VIEW
|
|
Arpita Pal Agarwal – Associate
Director, PwC
IT and telecom work in tandem, as IT is an integral part of the
telecom growth story and the growth in telecom would not have come
without these companies having a robust IT infrastructure in place.
For example, agility to react to a competitor’s plan is
extremely important. In such situations, you need billing platforms
that are robust and flexible enough to support a new business
plan.
With increased competition, telecom service providers are facing a
dip in their voice-based revenues, and they will soon have to find
a way to increase their value-added services. This means that
telecom service providers, who were till date content to just see
subscribers being added to their networks, will now take steps to
actually identify the customer and associated spending patterns.
This will require investments in business intelligence, and we will
see telecom service companies increase their usage of data mining
and analytics tools to know more about the customer. Going forward,
as telecom service providers increasingly target the enterprise
space, the reliance on a robust IT infrastructure will be even more
crucial. We also see an acceleration of the trend of total
outsourcing of IT operations to specialized service providers.
The banking sector is another big field for telecom operators, if
the RBI grants a license. Mobile banking by telecom operators can
reach the rural interiors of our country, where entities from the
government, public and private banks are struggling to make their
presence felt. If mobile banking by telcos is approved by the RBI,
one can expect companies in this space to take more initiatives to
further improve their IT infrastructure.
|
Indian manufacturers face great competition from countries such as
China, and are naturally keen to improve their competitiveness
using IT. Most manufacturers have an extensive and complex network
of suppliers and customers. Hence, BI tools that provide these
companies with the required information to make timely and accurate
business decisions, is critical today. Information could be related
to customer buying patterns, monitoring inventory levels and
benchmarking distributors or regions.
The survey findings highlight that 98 percent of the CIO respondent
base expect to increase their budgets for BI in 2010. Investment in
virtualization technologies is second in the list with 92 percent
affirming their intention to invest in this technology. The
interest in Document Management Systems (DMS) is also high, with 69
percent of respondents stating they will increase investments in
this technology. Web 2.0 tools, though popular, have not made it to
the ‘must do’ list, with only 36 percent of respondents
saying they
will increase investments in Web 2.0 tools in 2010.
| Figure 1: Outlook for IT budget for telecom service
providers |
 |
The usage of open source tools is also gradually picking up in this
sector, with over 41 percent of the respondents using open source
operating systems, 40 percent using open source office productivity
suites, and 11 percent using open source database and messaging
systems.
Speaking on challenges CIOs in this sector face, 59 percent of CIOs
cited integrating disparate applications and systems as their
topmost challenge.
To reduce overdependence on a single country such as China, many
countries are today actively looking at India as an alternative
manufacturing hub. To India’s benefit, it also has an
extremely successful software services industry that can lend the
right support to boost the competitiveness of Indian enterprises.
Many SMEs are looking at implementing ERP solutions. Large
enterprises too are looking at increasing their IT spends in
technologies such as BI to accurately identify customer trends. The
potential of Indian manufacturers to transform their global
competitiveness is indeed bright.
Knowing the customer
The Infrastructure Agenda 2010 survey shows that a significant 66
percent of respondents polled in the telecom sector are keen to
increase their investments in business intelligence tools in
2010.
Creating a Secure Ring
By virtue
of the industry they are in, telecom service providers have access
to vast amount of personal information on end customers. Even a
minor data breach can result in a public relations disaster. On the
operational side, the same threats that can pull down an enterprise
network can manifest themselves on a telecom IP-based network.
Globally, distributed denials of service (DDoS) attacks are common
against telecom service providers, where hackers attempt to
overload a network with illegitimate traffic. This prevents
legitimate users from accessing the network, and over time, leads
to poor network quality—ultimately affecting the brand and of
course, revenues.
Indian enterprises in the telecom sector have taken these threats
very seriously, with over 70 percent of enterprises in this sector
saying they will increase their spend on security.
| Figure 2: Top challenges faced by CIOs in this
sector |
 |
Virtualization and SaaS lead efficiency
drive
With pressure on margins, every CIO in the telecom sector is
looking at ways to cut down costs using technologies, techniques
and initiatives such as virtualization, open source and SaaS. 75
percent of enterprises in this sector already use enterprise
applications via a SaaS model, while 75 percent use open source
development tools.
Server consolidation using virtualization is a big focus area, and
all the enterprises in the telecom sector have indicated their
preference to increase their IT spend on virtualization in
2010.
With the telecom sector caught in the tailspin of a price war, CIOs
will be under huge pressure to cut costs while increasing
efficiency and profitability. This aspect was highlighted as 75
percent of the respondents stated that their main challenge to
implement key IT initiatives is the lack of a proper budget.
Other top concerns include unclear and unrealistic business
objectives and integrating disparate applications and systems.
Going forward, the pressure on CIOs to innovate will be immense, as
telecom operators look at creating new business models using the
power of IT. For example, it will be crucial for CIOs to provide
the right type of platform that will allow telecom service
providers to launch multiple services from a single delivery
platform. This can be seen in the case of Bharti Airtel that has
built a Service Delivery Platform—a single platform from
which the company can serve customers from different segments such
as mobile, broadband and enterprise. In the future, such platforms
will be more of a norm, than an exception.
|
Niranjan
Prasad
CISO, IDEA
Cellular
Strategic outsourcing contract management will be a key focus
area for us in 2010, and we will have tight cross-functional
working groups to look at optimizing specific sections of
contracts.
Our focus will also be on implementing IT as a business
enabler—in the areas of new business creation, for lowering
business operating costs, and for keeping unrealistic expectations
in check. Keeping in mind new security challenges, we will take
adequate steps to counter telecom-specific malware, telecom fraud
and threats related to application security. To enable effective
security, we will closely work with the business through formal and
informal channels. We will also create a separate InfoSec function
with basic ISMS and various security improvements as its
mandate.
|
|
Tamal
Chakravorty
CIO, Ericsson
India
In 2010, we will focus on newer business models, and take the
required steps to adapt our IT function to these models.
The goal is to move towards a better managed services
environment.
|