China is less mature than India in using value added services – Interview


Yahoo | Indian Express Finance | Monday July 26, 2010 | 01:42 AM IST

Bharti Airtel started a trend around 5 years ago by outsourcing their business to IBM as it believed that the American company will bring in global best practices and innovative solutions. Today, IBM manages around 300 million subscribers in India by providing support to the country’s top telecom operators. In the highly competitive Indian telecom market, retaining the customers and keeping them happy is the key priority for Tim Greisinger, vice-president, communications sector, IBM Growth Markets Unit. In an interaction with Diksha Dutta, he confesses that a key challenge for IBM in India is to constantly improve and manage the tremendous growth they face in the sector. Excerpts:

How important is the Indian telecom market for you?

It is absolutely important. Not just in terms of size, but also in terms of learning and maturing that we have from this emerging market which is growing so quickly. Even China has equal massive size, but it’s less mature in using value added services (VAS) and business models of outsourcing. Most of the work that we do for the global telecom operators is done out of India. So it’s a large domestic number and also the work that we do for AT&T, Vodafone and other global operators is large.

What is your footprint in the Indian market?

We have strategic relationships with Airtel, Vodafone, Idea and Datacom. On the other hand with BSNL, Reliance and Tatas, we do not have end-to-end services relationship, but part of them is services or technology. We also have BPO services; say a call centre for Bharti. In India, there are two major players BSNL and MTNL who are already IBM’s existing clients. At MTNL, we are doing this project on their entire billing project. At BSNL, we have some key projects. For instance, their entire broadband infrastructure runs on IBM. Their huge subscriber base runs on IBM’s software and hardware. Thus, on the BSNL side, we are in the broadband space and for MTNL; we are there for CBR billing, which is going to be their billing platform for all the future services.  

Today, we can safely manage 300 million subscribers of IT in India. The total mobile subscriber base in India is around 600 million and IBM is managing IT for half of the subscriber base. We achieved this in the last 4-5 years. Now, with 3G coming in and broadband wireless, mobile number portability, this market is growing fast. We also run mobile portability warring house for Telcordia. The company runs warehousing and IBM is their IT partner. We have a strong base in India when it comes to the telecom sector. Moreover with 3G, broadband wireless and mobile number portability coming in, this will put a lot of expectations on the telecom operators from the consumers’ end. We feel that we are well placed to again capitalise on what we have achieved so far in relationships. We recently committed $100 million on research of mobile applications that is being led from India Research Lab. It is a global initiative but being led from India Research Lab.

What is the Indian telecom market size as compared to the global market?

According to some estimates, the Indian telecom services market is forecast to become Rs 250,400 crore by 2013, growing at a CAGR of 13.9%. Also, India is projected to become the second largest telecom market globally soon. The total number of telephone connections reached 452.91 million at the end of May 2009 and is expected to increase up to 600 million by 2011, with wireless subscribers covering almost 90% of the total market share and remaining 10% by fixed line subscribers. With more mobile operators launching services and established players turning their attention to low teledensity markets, mobile telephony will continue to grow, driven large by the rural areas.

What are the key challenges you face in the Indian market?

One of the good challenges for us is to constantly improve and manage the tremendous growth which we are facing from the telecom sector. IBM Research has hundreds of mathematics PhDs and our dedicated researchers enable us to focus on helping our customers. IBM through Business Analytics is helping them to understand their client’s perspective. IBM started focusing on business analytics a year ago.

Is the IT spending in the Indian telecom sector different from other countries?

This could be little deceptive. When you talk about percentage and the way what’s happening to their revenues, I would say the percentage may not be too rational. The difference between now and 2004 is huge. I would say, there are two major trends we have seen. In 2004, companies started concentrating on IT as they felt it was important to streamline their IT infrastructure. And now, because of the technology trends, there is a huge spending on IT and its scope has increased significantly. The scope of IT also encompasses networking and wireless forum and we are providing all these to our customers in one integrated form. We have a big opportunity in this sector as we are developing infrastructure for the smarter planet.

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