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Tata Communications, the true 'MNC originated from India', as its CEO Vinod Kumar puts, is all set to redefine its business model betting high on cloud services. In order to target the emerging markets around the world, as well as address the ongoing convergence of data traffic on Internet Protocol (IP) systems and the growing need for managed services, the Tata Group-Indian Government joint venture is putting all its thrust on cloud computing, enterprise video, and mobile broadband offerings.
Speaking at the company's third annual global media and analyst summit, Kumar said that all future communication business would depend on how the services and desired content is delivered to the users seamlessly and anytime, anywhere. “Our focus on cloud computing, enterprise video, and mobile broadband were aligned with how the world expected services and content to be delivered and consumed anywhere, anytime,” Kumar reasons.
He said that these services would be part of the company's managed services offerings, which would be key to addressing the needs of companies in emerging markets. He said these businesses lacked the necessary IT infrastructure to scale without huge capital investments, and added that Tata Communication's InstaCompute infrastructure-as-a-service (IaaS) offering was built to meet this need. Further to offer the IaaS to the city-state as well as other South Asian markets including Malaysia, Hong Kong, Indonesia and Vietnam, the company had launched its Singapore data center in March 2011. It also has data centers in India to host InstaCompute.
Elaborating on enterprise video services, the CEO pointed out that video will continue to take up most of the bandwidth needed, with consumers in particular driving up demand for better quality videos streamed through the Internet.
Enterprise customers, too, are catching up in terms of requesting for video services at work as part of their unified communications (UC), he said, adding that Tata Communications is hoping to tap this demand to increase its presence in the videoconferencing arena.
He pointed to the company's recent tie-up with Formula One, as its global technology partner, as an example of how far the Indian company has come in terms of providing complex IT services beyond just networking capabilities. He hopes this case study can help the company win more potential enterprise customers.
Kumar noted that today's technology landscape continues to change and evolve quickly, which makes specialized IT professionals with the right skillsets a hotly demanded, and increasingly costly, asset. This also means it is difficult for companies to always have the right in-house talent to manage all aspects of their IT infrastructure and service and, thus, presents third-party, managed services as viable alternatives to solve their conundrum, he added.
Second Home Markets
Within the Asia-Pacific region, Tata Communications have identified Singapore, Hong Kong and Australia as key developed markets on which to focus, said Srinivasa Addepalli, the company's senior vice president of corporate strategy and communications. It is also targeting to build its presence in Vietnam, Indonesia, Malaysia, and the Philippines, he added during a breakout session at the summit.
Addepalli said while the region is already home to a high internet user population, mainly contributed by China, there is still a huge room for growth.
He noted that high internet growth can help boost traffic on Tata Communications' networking infrastructure, which gives the company insights on consumer patterns and allows it to tailor related services to various service and content providers. The company's data revenues from Asia-Pacific, excluding India, grew 5% to reach 14% in 2011, compared with 2009, he revealed.
The executive also pointed to Indonesia and Vietnam as two markets that could potentially be established as “second home market” status, such as that of South Africa, in the company's eyes. Addepalli said the two markets are generally large and growing, with a strong telecoms and IT base, and attracting much investor attention and activities from abroad. These are factors that Tata Communications value when considering investing in emerging markets, he added.
Ring Around the World
During the GMAS event, the company also announced the completion of the world's first round-the-world fiber optic cable network with the official launch of its Tata Global Network—Eurasia (TGN-EA) cable. The cable connects Europe to India, through Egypt, bringing increased capacity, resilience and enhanced communications links to not only the Middle East, but to the rest of the world.
The completion of the final link across Egypt enables TCL to offer its customers access to a wholly-owned express route cable from Europe to India with improved latency, redundancy and scalability. In conjunction with the company's recently launched TGN-Gulf these routes will cater to the increasing demand for voice, video and data services in and out of the Gulf region.
“Companies and carriers in developed and emerging economies require the confidence and security delivered by a wholly-owned network such as Tata Communications' TGN,” Kumar added.
The round-the-world ring also offers city-to-city connections in contrast to more traditional networks which only link cable landing stations. This approach is more cost-effective, flexible and provides a faster time to market delivery, as well as being easier to maintain and manage.
The completion of the final TGN-EA link follows significant investment from Tata Communications in its global network in recent years. The TGN-EA cable system now interconnects Europe, India, the Gulf and Middle East seamlessly with the rest of the world while consistently providing higher quality bandwidth on a global scale. Tata Communications owns and operates the world's largest subsea cable network which reaches countries representing 99.7% of the world's GDP.
“This is a landmark moment for Tata Communications as we officially launch the world's first wholly-owned global submarine cable network as a complete and robust ring around the world,” concludes Kumar.
The 9,280 km TGN-EA system which links Europe and India, running across the Mediterranean and the Middle East, uses fiber-optic technology based on microscopic glass fibres as thin as a strand of human hair, and offers customers the lowest levels of latency with RTD around 92 msec with speeds from 2 Mbit/s to 10 Gbit/s available.
Emerging Markets Drive Enterprise Growth
Much is written about emerging markets but the focus tends to be relatively narrow with an emphasis on the BRIC (Brazil, Russia, India and China) countries. Multinational companies that have a presence in emerging markets such as Asia, the Middle East and Africa, are seeing their stock prices climb faster than those that do not have an emerging markets focus, according to new research by Vanson Bourne on behalf of Tata Communications.
There is a perception in established markets that emerging markets are looking to the West to replicate the approach that developed market countries have taken in creating successful businesses. However, the survey shows that businesses based in emerging markets are as likely, if not more likely, to look to other high growth markets for growth lessons and best practices with 84% of the emerging market respondents stating this to be the case. Ninety-five percent of the business leaders surveyed in China stated that they had looked to other emerging economies for key business learnings.
Tata Communications asked respondents in the Middle East, South Africa, India and China which of all the countries on the FTSE Emerging Markets Index they felt offered the most potential for growth for their business sector.
Respondents were able to select their own market in order to assess how much emerging market companies are still looking to their home markets for further growth and expansion. That aside, it is worth noting that every emerging market surveyed has expressed genuine interest in expanding business operations into one or more other emerging markets.
Future Goals
Moving forward, Kumar mentioned that the company has established 'profitability' in 2011 across its various business verticals and in fiscal year 2012-13, it would make 'profit as a habit'.
He added that the company was hoping to become the “Singapore Airlines of the telecom industry” in terms of providing exceptional customer service and industry disruption. “I don't believe the telecom industry provides the necessary benchmark for customer service, so we had to look to other industries,” he explained. Singapore Airlines have been ranked as the only airlines in the world to command 100% customer satisfaction.
Hiring, retaining and developing the right talent for the company is another priority for the CEO, as the company needs people who are versatile enough to handle and flourish in today's fast-moving IT landscape. The company is also planning to add 1,200 more employees this year to its existing 7,700 strong workforce.