'New operators will find their space among the existing players in the market'

Since 2006 alone, IBM has invested more than $1 bn in advancing new
telecom offerings including telco-related acquisitions. Focus on industry
skills, innovative and flexible business models, and investments in research to
improve service delivery are its differentiators in the Indian telecom market,
wherein IBM closed many deals.

Yogesh Dayal, director, Communication Sector Global Delivery, IBM, who is
leading a team of consultants providing delivery of offshore services to
telecom, media and utilities clients, shares his vision about the Indian telecom
market. For Dayal, who is a member of IBM India board of directors, India is set
to become a more exciting market. He says that though the company is yet to see
any significant impact on its business on account of the US recession, the
company's strong presence in Europe and Asia, besides new businesses in Africa
to mitigate risks. Excerpts:

Despite strong initiatives, the number of telecom customers globally is
not growing as expected. What are the main reasons?

The global market for telecommunications is expanding, and it is happening
through “demand pull” and “supply push”. The interaction of these two forces has
made telecommunications one of the leading growth sectors in the world economy.

On the demand side, growth is pulled by an increasing reliance on
telecommunications and information technology, in all sectors of economic and
social activity. On the supply side, growth is pushed by rapid technological
developments, which continuously improve the efficiency of existing products,
systems and services, and provide the foundation for a continuing stream of
innovations in each of these areas.

The effect of the fundamental forces driving demand and supply has been
amplified by the worldwide trend to liberalize markets for telecommunication and
information technology goods and services. As a result of this trend, the
majority of telecommunication networks are now privately owned and operated.
Significant developments have also taken place to introduce competition at the
national, regional, and international levels.

Comparing the trends, what are the key differences between IBM's two key
markets in the Asia Pacific region?

Asia Pacific is a key growth market through which we continue to integrate
our company and serve domestic and international clients in new ways. Apac
countries remain important to IBM's business strategy. Earlier this year, IBM
announced a $1.6 bn investment in emerging markets including India.

IBM Global Business Services continues to ramp up capabilities and expertise
in India. This includes highly skilled consultants-industry experts who can help
clients with strategy and change, or help them better manage their IT
infrastructure and applications-to extract optimal business value. In terms of
key differentiators, we are collaborating with our Research and Services teams
to provide solutions for practical customer problems-this is an edge that we
have built over our competitors.

IBM has more than 3,200 dedicated professionals in its R&D labs in India.
What is your expansion plan in terms of manpower? What are your main challenges
for retaining the talent?

I will not be able to give you exact details on this area, but we continue
to invest heavily in research and innovation programs, and are able to attract
and retain key talent.

Do CDMA operators neglect IBM's initiatives in the telecom space? What are
the main reasons?

IBM has a wide array of offerings for the telecommunications industry,
designed to help service providers reduce cost, respond quickly to customer
needs, and increase organizational productivity. These technologies and
solutions help telecom companies to focus on their core business as they
streamline their business processes and build the next generation infrastructure
to deliver new services faster, easier, and at lower cost.

From the perspective of business processes, the needs of CDMA operators are
similar; it is only the underlying communication technology that is different.
Globally, a large number of CDMA operators are our clients.

India is going to add more operators soon. According to you, will new
operators have enough space to compete with the existing cellular companies?

The Indian telecommunications industry is one of the fastest growing telecom
markets in the world. The telecom network in India is the fifth largest network
in the world meeting up with global standards. Presently, the Indian telecom
industry is slated to contribute an estimated 1% to the country's GDP.

The Indian telecom market is an advanced market and to address requirements
of telcos here, IT companies need skills and experience to handle the rapidly
transforming IT applications, maintenance, and development needs. Of course,
there will be increased levels of competition, but we feel that new operators
will be able to find their space among the existing players in the market,
taking into account the growth rate in this particular vertical.

What should be their focus in order to sustain in the race?

In India, subscriber base is growing in millions every month; they need a
business agile system to respond to their new services and products. Their
foremost priority is to have an IT system that is business agile and responds
quickly to the dynamic needs of businesses. That's where IBM has positioned
itself on SDP, IMS, ESB/SOA to offer such “high reflex” IT.

New players should come up with offers to meet the demand for a new spectrum
of services as the industry grows and deploys larger and expanded services for
the domestic market.

As I mentioned earlier, our global experience enables us to offer the best of
services to the clients in India. The telecom market is changing. IBM offers a
fully integrated services delivery platform so that service providers can
leverage a consistent delivery and management environment for services,
applications and content across multiple access networks and devices.

Can the US recession impact your telecom business in India? If not, what
are the indications? If yes, how do you ensure to sustain this momentum?

We are yet to see any significant impact on our business. In addition, we
have a strong presence in Europe and Asia. We are beginning to see momentum in
regions like Africa, where we have recently won some business.

The Indian telecom industry is slated to face a number of technology
challenges. What are the demands of service providers?

The primary challenges driving telcos today are reducing operational
expenditure, improving customer service, finding new sources of revenue, and
transitioning to next generation networks. IBM has developed a set of solution
offerings to help clients in the areas of enterprise and services
transformation.

As in any other industry, the needs of growing markets are obviously very
different from saturated markets. Explosive growth, the result of an expanding
cell phone market and multiple mergers and acquisitions, left many service
providers with significant IT cost scalability and customer service challenges.

Baburajan K

baburajank@cybermedia.co.in