BSNL: Tall Order?

Experts say corporatization is not a magic wand. Just
converting two departments, the Department of Telecom (DoT) and the Department
of Telecom Services (DTS), into a company called Bharat Sanchar Nigam Ltd (BSNL)
does not change the employees, as the business remains the same. Though many
consider this process to be mechanical, a lot will depend on the corporate
structure of the company, the board of directors –both external and internal,
the balance sheet of the company, and the debt-equity ratio.

Formed on 1 October 2000, BSNL inherited 362,000 employees
and a gross capital asset of Rs 75,000 crore (as on 31 March 2000). AF Fergusson,
the consultant for the corporatization accessed the market value of the company
to be worth Rs 250,000 crores, with a net worth of Rs 68,000 crores. A giant in
the telecom sector, BSNL is a now a major force in the corporate world, trying
to establish its new image.

TH Chowdary, the first CMD of VSNL, says, "BSNL can
become a performing commercial entity just like any enterprise, if its board of
directors and the CMD are competent, independent, forward looking and daring.
Most importantly, it is the vision and leadership qualities of the first CMD
that will determine the character, competence and progress of BSNL. Unless the
old mind-set, the business-as-usual, and non-accountability attitudes of the
staff are changed, the corporatization of DoT will only be window-dressing. In
fact, it will be a fraud to mislead others to think that the former government
departments have now become a corporation like British Telecom or Korea Telecom
or Telia."

In the present structure, there is no difference between DTS,
DoT and BSNL. The structure more or less remains the same and even most of the
designations of the top management are the same. A lot will depend on AF
Fergussons who laid the objective of corporatizing DTS, along with NM Rothschild
and JB Dadachanji. Presently, the consultants are reviewing the organisation,
commercial accounting and finance of BSNL and are planning to submit the report
by 31 December 2000.

There are numerous issues that BSNL has to grapple with but
some of the important issues, according to TH Chowdary, is defining its mission,
preparing for competition, treating users as customers and not as prepaid
subscribers, becoming accountable for financial and service performances,
understanding the money part the of business–raising capital, servicing it;
earning revenues through traffic and not rentals, increasing productivity,
getting away from voice centric revenue, submitting to independent regulation
without the protective armour of government statutes, proper accounting and
financial analysis.

Organisation Structure

Initially, a board was constituted prior to 1st October, as
certain functions had to be carried out. Subsequent to 1st October, the regular
board has come into position and is fully operational. The corporate structure
is in place. All the things are in position, not only in the head office, but
also in the circle, says DR DPS Seth, CMD, BSNL. There are five directors:
director (finance), director (planning), director (operations), director
(commercial and new services) and director (HRD), who will be reporting to the
CMD.

Any further expansion or modification of the board would be
done at a later stage, as and when the government decides to do so. The external
directors are still to be appointed. This would bring more clarity to the
organisation structure.

Two new groups have been incorporated–the operations, &
the commercial and new services group. The commercial and new services group was
created, as there is more stress on new services in BSNL. The operations group
will help in providing better services by keeping the systems up and running,
thereby providing a more reliable service.

Debates are still on about how to club the different lines of
business that BSNL operates. Dr Seth’s view is to go on the basis of units
based on different business lines, irrespective of the location. There is
another option of clubbing the different lines of business on the basis of
geographical options. So, a model is yet to be worked out which will lay the
true foundation of BSNL.

Human Resource

The newly formed BSNL’s most acute problem is the
absorption of 362,440 employees of DoT and DTS, which are under deemed
deputation in BSNL. Out of this, the Ministry of Telecommunications has retained
around 600 employees and the rest have been transferred to BSNL. Presently, BSNL
has not a single employee of its own as everybody is under deemed deputation and
in a month’s time, the process of transfer of employees to BSNL will be
initiated. According to Kranti Kumar, director, HRD, BSNL, the complete process
of the transfer of employees in all the grades (B, C, and D) will be completed
by end of 2001, if there is no hindrance. Once the employees are inducted, the
job of the HR department will increase multi-fold, as employees will have to be
trained to acquire new competitive skills by acquiring new technologies.

Transfer of People

In December, the consultants, AF Fergusson, are submitting
the final report on BSNL restructuring which will initiate the process of
absorption of employees in BSNL. Kranti Kumar says that we will finalise on
general terms and conditions along with the option form where the employee will
make their choice The process will start with group C and D employees. After
fixing the terms and conditions, it will be discussed with the representatives
of the union and it will be finalised.

Since there was an increase in the salary of employees by as
much as 70 percent when MTNL was corporatized, there is a feeling that the
employees will ask for the same or higher percentage when negotiations with the
union take place. It is expected that there would be friction in terms of salary
and perks, as the expectation of the employees may not match the paying capacity
of BSNL, says Kranti Kumar. "If we offer higher salaries to our employees,
then our financial viability might be threatened, however we know that this may
happen, so we are changing our business line and are looking for more a
profitable business, so that we have the capacity to pay to our staff,"
added Kranti Kumar.

Keeping group A employees from being absorbed in BSNL is not
a right step as there would always be a feeling that they are on deputation and
that they cannot contribute to the maximum as the sense of belonging is lacking,
say many experts.

Training

It is a huge task to train around 362,000 people coming from
diverse backgrounds and different fields. Kranti Kumar feels that their weak
point is training though they have 44 training centres that come under the
umbrella of BSNL. To convert this huge manpower into becoming a competitive
force will take BSNL at least a couple of years if the training modules are
devised in a proper way.

After transforming into a corporate entity, BSNL’s biggest
challenge would be to train the accounts people right from the top to the bottom
about corporate accounting after the government accounting that they were doing
a few months ago. People have to be trained in corporate law. Employees have to
be trained at the customer interface point with respect to corporate culture and
new technologies to give them a competitive edge. Whenever there is a need for
trainers, guest faculties and experts, help will be sought.

Freeze in Recruitment Process

To keep the number of employees under check, DoT and DTS have
not been recruiting people for the last 15 years, as the ratio of employees to
the number of DELs was on a higher side in comparison to the global benchmarks.
Kranti Kumar feels that their employee to DEL ratio has improved by 500 percent
in recent times and is likely to improve further in a couple of years. The
international benchmark can be achieved as the number of lines is being
increased and there is a minimal or no increase in the number of employees.

Even for new projects like cellular telephony, into which the
company plans to jump, there are no plans to recruit a large number of staff, as
the existing staff will suffice. There would be some recruitment whenever there
is a necessity so that the division is handled properly. Even for overseas
projects, Kranti feels that the company has enough skilled manpower as they used
to supply skilled manpower to TCIL.

Decrease in Operating Expenditure

The freeze in the recruitment process will help in saving a
lot of revenue for the company as it is estimated that the operating expenditure
takes away 30 percent of the turnover of the company. The increase in salary
with the induction of employees in BSNL will also increase the operating
expenditure. It is estimated that there would be a minimum rise of 50 percent in
the salary of BSNL employees. Though it is said that the new services will help
in compensating this increase, BSNL will have to initiate cost cutting exercise.

Increased Focus on Customer Care

For improving its branding in the market and to face
competition aggressively, BSNL is improving its customer care by initiating a
number of steps on the macro front. This, however, would not be enough, as the
company has to look into more micro steps. Customer care should start right from
the linesman to the top management of the company and should not be driven only
from the top management. It will take a long time for BSNL to provide excellent
service to the customers, as their employees have been working in a monopoly
regime for quite a long period of time–where customer care hardly existed.

To start with a number of steps have been taken to improve
customer service. The fault analysis of BSNL says that around 20 percent of
faults are due to telephone instruments. A decision has been taken by BSNL that
they would like to encourage people to have their own telephone instruments and
their own wiring (from the interface unit to the home) says Dr DPS Seth. This
will provide the customer the flexibility to choose their own instruments
thereby giving them a rebate of Rs 500 in installation charges. The other method
for reducing fault rate is to minimise the cable segment and use of drop wires.

It has been decided that there will be increased use of
optical fibre or radio connectivity to the remote subscriber unit that is
located near the subscriber and beyond that copper will be used. The net result
is reduction in copper cable and thus reduction in the fault creating area. The
drop wire is also a major cause of fault & will be replaced by more five
pair cables that will be used right into the premises of the subscribers and
will be terminated on a five pair distribution point.

It is very difficult to lodge a complaint or to get any query
answered. So, for responding to customer queries there would be a single
telephone number for all the complaints rather than having separate numbers by
providing customer service centres or call centres. These centres will have a
number of operators having the database of customers on their computers, thereby
helping the agents to answer the queries of the customer. The agents will then
make sure that the information flows to the concerned person and a response is
obtained within the timeframe.

"We are hoping that the first call centre would be ready
in Indore by December", says Dr DPS Seth. "Once the software for the
Indore centre is finalised we will make it available to other places, as all
SSAs are planned to have a call centre. The number of seats in each city will
depend upon the size of the exchange and type of the network.

Strengthening Existing Services:

A lot has to be done to make the existing services
commercially viable, be it basic services or the ISP service keeping in view the
market dynamics that are fast changing. The company has to be more agile to the
pricing as it is operating in a competitive environment and not in a
monopolistic environment. There was no focus on marketing of services as the
demand far outstripped the supply. The company now has to pay more attention on
marketing their services.

The company plans to strengthen existing services says BR
Khurana, director (Commercial & New Services), BSNL, by focussing more on
the Internet and value added services on the IP and IN (intelligent) platforms.
"Focus should also be on marketing of existing services thereby informing
the customers about the host of services offered by BSNL," says Khurana.

In the ISP segment, BSNL is present in 65 cities but has a
nominal base of 75,000 subscribers. The company is planning to increase its
marketing presence in these cities and also increase their presence in most of
the cities in India. According to Dr DPS Seth, "In the ISP market, as far
as our strength is concerned, nobody else matches us on that but when it comes
to reliability and bandwidth there is a lot to be achieved. We have worked out a
certain set of decisions. First, is the NIB (National Internet Backbone) which
would be commissioned any day now as various tests are getting completed. This
will help in providing higher bandwidth inside the country. This will be
accompanied by an aggressive marketing campaign which has started with the
coming out of an aggressive Internet tariff structure recently."

Jumping into New Services:

In order to pay its huge workforce, the company is planning to jump into new
services where investment is much less a witched networks. BSNL should have a
futuristic outlook and keep on updating its network, if required, to be
competitive. In the long run, a part of the equity should be divested in favour
of a strategic partner so that it becomes a customer-focused company.