Getting it Right

Telecom as a vertical is becoming a booming business opportunity for IT

service companies and pure play solution providers. FY 2007-08 saw the telecom

vertical growing with operators adding new customers.

While OSS/BSS continues to get a major chunk of the software pie, many

operators had unique requirements that kept the demand for telecom software in

the pink of health. Except a few, almost all IT services companies offered

solutions cutting across segments. The telecom software market is indeed

macroscopic and provides ample opportunities for solution providers to either

provide a product-based or a solution-centric offering.

Ground Realities



The market became more competitive in FY 2007-08 because there was a high

degree of consolidation over the year. And when two companies merge, it also

brings along IT integration issues; and only IT solution companies that had deep

domain expertise were able to make a mark in this space.

According to VOICE&DATA analysis, telecom operators, over the last year,

looked at developing new business models and networks and providing new services

to subscribers-transforming from mere telecom operators to communication service

providers. Moreover, the main objective of the leading service providers

revolved around increasing market share and customer retention, hence, in a way,

they were forced to offer more value-added services and innovative post-paid and

pre-paid plans in the cellular business.

Vendors in the Fray



TCS maintained the growth momentum over the year. The primary growth drivers for
TCS in the telecom space came from large transformational and long-term SI

contracts. Meanwhile, it also saw significant growth in the existing accounts

due to significant cross-sell opportunities. It also expanded its service

offerings and gained new engagements in the Apac and Middle Eastern markets.

TCS bagged a major deal worth $70 mn, with one of the world's leading telecom

companies to provide product engineering and R&D services for its operations and

software business unit in Europe.

Tech Mahindra continued its growth with its ability to forge long-term deals.

With this strategy, the financials of Tech Mahindra looked great at the end of

the year. The company recently signed a $350 mn deal with BT for handling a

large part of the application support and maintenance function of its IT estate

for a period of five years that placed Tech Mahindra right at the heart of BT's

strategy for delivering service excellence to customers in the UK and across the

globe.

In the BSS domain, Tech Mahindra has won an engagement to provide adjunct

rating, data warehousing, business process management, and billing

reconciliation solutions to a leading GSM operator in Kuwait.

For Infosys, the telecom slice is getting bigger by the year. With some of

the biggest global telcos as its clients, Infosys' key emphasis on telecom

domain is improving the efficiencies of its clients.

Wipro's telecom services business grew significantly in FY 2007-08 with major

traction from Asia Pacific. Its European business also grew significantly across

service lines. In terms of key developments over the year, Wipro secured a large

transformational outsourcing deal from Aircel. It also garnered a large

greenfield implementation for a leading service provider in the Middle East.

Meanwhile, Sasken also had a good year. It added six new customers this

quarter, taking the total number of active customers to 89. It entered into a

partnership with a leading provider of high-availability platforms to provide

middleware solutions for content delivery and application hosting platforms, and

made significant inroads into a market leading tier-1 vendor.

Subex is another company that has carved a niche over the years. But FY

2007-08 was a rough year for Subex in terms of expected financial performance.

The company cites that one of the main reasons for a not-so-good year was the

reduction in capex of one of its key customers and the resultant postponement of

contracts. However, the company is bullish on FY 2008-09 with successful

integration of Syndesis.

Outlook



The outlook for the telecom software space remains bullish for FY 2008-09.

Telecom software service providers will launch more services aimed at areas like

revenues optimization, improving operational efficiencies, and solutions that

pave the way for effective OSS/BSS. Today, software has become a critical part

of the telecom business, and this makes the vertical bigger every year and in FY

2008-09 some of the experts aver that it will come on a par with BFSI.

Shrikanth G



shrikanthg@cybermadia.co.in