The sky seems to be the limit for the booming Indian telecom software companies. Thriving exports with the dynamic domestic market, the future of the Indian telecom services market looks extremely promising with a revenue growth of 43 percent at Rs 9,902 crore in FY 2004–05.

The industry has witnessed rapid growth in cellular, radio paging, value-added services, Internet, and global mobile communication by satellite (GMPCS) services. Software solutions and services to enable Enterprise Application Integration (EAI) and convergence of services (both retail and wholesale) and solutions to enable enterprise movement to GenNext networks have dominated this segment.

Current Market Traits
Revenue assurance is one area which saw a high demand as, at the end of the day, this solution is the most important element to the business. To meet the competitive demands of the market and the customers, value added services and billing were the differentiators.

The focus, both international and domestic, has been on application development and management. There has been an increased focus on commercial off-the-shelf (COTS) implementation and systems integration. In India the focus primarily has been on SI covering all aspects of OSS and BSS.

While Indian vendors like Wipro, Infosys, TCS, and Subex were busy catering to foreign service providers. The domestic market was dominated by players like CSG, SchlumbergerSema, ADC, Convergys, and Eftia.

Globally, the telecom vertical is considered to be one of the most lucrative domains for software companies.

FY 2004–05 broadly saw investments through the rollout of new services such as high-speed Internet access through mobile devices and MMS, R&D related to the 3G mobile communications, wireless technologies, embedded systems for mobile devices and CRM systems.

In FY 2003–04, the telecom software market had witnessed a growth rate of about 18 percent to reach Rs 6,597 crore, and by the end of 2005, this figure is expected to touch Rs 12,000 crore.

Among the solutions to manage network operations, support systems, billing software, OS integration and business process re-engineering, revenue assurance, and management-the focus will largely continue to be on business services support to create good telecom billing system, billing mediation, customer relationship management, and fraud management.

The Software Market
Though the bulk of the revenues for the telecom software market come from exports, domestic market has also been playing an important role. The domestic telecom market constitutes nearly 28 percent of the overall revenues.

The domestic market has been a major adopter of telecom software with IT spend in telecom skyrocketing. The deregulation of the telecom sector together with quick roll out of wireless network and application and services has created a demand for telecom software across the physical layer, from switches to the enterprise level.

With next-generation networks, broadband, and 3G rollouts, the demand for OSS/BSS and network management is growing rampantly. Companies will need to invest in infrastructure, improve quality of service, network efficiency, and billing solutions. These factors together will drive the domestic market.

The top-four telecom software companies in India-TCS, Wipro, MBT, and Infosys-contribute a large chunk of the software exports. Other significant names on this radar include Flextronics Software, Subex, Sasken, and Future Software. They are engaged in development, integration, and implementation of software products and services like OSS/BSS, network management, billing software, billing mediation, customer relationship management, revenue assurance, fraud management, and embedded and equipment testing for both wireline and wireless carriers.

The BI market in India is roughly estimated at Rs 80 crore and is expected to grow at a CAGR of 28 percent in the next few years.

Future Trends
Telecom software players will continue to invest on enhancing their services and deliver value added services.

Service providers need to increase their operational efficiency and delivery mechanism. With the advent of 3G services, spending on telecom software is definitely set to go up. Solution providers will have to look at GenNext networks as most carriers and enterprises are evolving to the next level of networks. OSS will be an area that will need to be looked in depth with the ongoing evolution of the networks and services.

The current favorite is the entire wireless gamut-EDGE, UMTS, and WCDMA-this is where most Indian software companies are currently concentrating their efforts.

Solution customized for the broadband services is a vital area and will continue to grow in importance in terms of offerings in this space.

Another area of interest is telephony-based applications, software patches for VoIP, and VoIP/TDM integration. Routing/MPLS is another small but hot area in the telecom software scene in India. Then there are emerging application areas like IP-QoS, broadband aggregation, and wireless-IP integration.

The players
Wipro, with an aggressive focus on telecom as a vertical, registered a revenue to the tune of Rs 1,879 crore compared to Rs 806 crore in FY 2003–04. Wipro, which employs about 5,500 engineers in its telecom business, has developed software for handsets, hardware, and telecom equipment and recently tied up with SmartTrust to get into a deal to develop device management software to help mobile handsets easily receive content and applications.

TCS, a market leader for a long time, interchanged places with Wipro to be at number two. The telecom software (TS) constitutes nearly 17 percent of its total revenue. The company revenue from TS was at Rs 1,595 crore for FY 2004–05. The telecom practice center in Chennai hosts the ADM (application development and maintenance) and e-business service practices. It also provides business process outsourcing services. The centre provides end-to-end solution in the areas of OSS/BSS applications, enterprise applications, middleware solutions, open platforms, and mainframe platforms.

Infosys made significant progress and saw an over 66 percent growth and moved from Rs 795 crore in FY 2003–04 to Rs 1,319 in FY 2004–05.

There has been a strong demand from telecom companies specifically from international carriers and this demand is increasing from the last two to three years as carriers are looking at software companies for a delivery model that they have never looked at in the past. Infosys' entire revenue in the telecom space comes from overseas from the service provider space. The company in telecom as a vertical, focuses on IT system, network management, and OSS/BSS billing.

They are the largest software services company focusing in the carrier space in India. Their large clients are British Telecom, Telstra, and telecom service providers in North America.

Going ahead, the services company is investing in areas of billing, CRM, VoIP, and testing. Testing is becoming important as new things are getting built up and testing needs to be undertaken at unit level and also at integration level.

Flextronics and Sasken both had an average growth to be at Rs 458 crore and Rs 288 crore respectively.

Among the top players a company that showed traction was MBT. It touched Rs 1,054 crore in FY 2004–05 as compared to Rs 729 crore in FY 2003–04 - a growth of over 45 percent over the FY 2003–04. MBT works as an application integrator on third-party software, especially in areas like OSS and BSS.

There are also Indian telecom software companies with products in niche areas. Flextronics Software has voice-over-packet protocol stacks and frameworks with protocol stacks for GPRS and UMTS. Firms like Sasken are primarily in telecom software and solutions in the areas like wireless networks and wireless LAN.

Minu Sirsalewala