Segments: Telecom Software: Growth Unlimited!

The telecom industry has been witnessing consistent growth over the last few
years. It's not only equipment vendors and service providers that grew
multifold in all these years but telecom software companies too. Telecom
software market grew by 22% from Rs 9,442 crore in FY 2004-05 to Rs 11,519 crore
this year

Though domestic telecom revenues of all the big software companies have grown
significantly this year, the contribution of domestic revenues in their overall
telecom pie is merely five percent. They still find international market more
lucrative for themselves as it gives them better margins.

The domestic market is still grappling with price competition and taxation
issues. And most of the domestic sales mean only software such as operational
and business support systems (OSS/BSS) and network management sold to service
providers. The export business include embedded and system software also.

OSS/BSS

OSS and BSS products and revenue maximization products gained considerable
traction with telcos realizing the significance of such solutions in improving
their bottom line.

Also the focus this year was on software license revenue for inventory
solutions, which is the center of the OSS universe. There are players such as
Cramer and Metasolv who provides such sulutions.

On the BSS front, billing is the critical area and service providers tried to
ensure efficient service delivery. It was complemented by solutions that offer
the convenience of accurate and timely billing. Reliance has retained Intec's
solution for its billing solutions.

Companies such as Convergys, Amdox etc have also grabbed some good contracts
for their billing software.

Infosys is quite an active player in OSS segment but current focus is only
international market. Though the company has been approached by various Indian
service providers, but it is still very keen on international market expansion.
Majority of its business comes from North America and UK while it is also
looking at tapping APAC and rest of Europe in a big way. The key clients include
British Telecom, Telstra and telecom service providers in North America. On the
services front, Infosys' top-end revenue come from customer and product
operations areas that includes customer billing and order management.

Similarly TCS, FSS, Sasken and Tech Mahindra are also focused on their
international operations in this vertical and most of their work involves
integration of software systems. Tech Mahindra's business model straddles both
telecom service providers as well as equipment manufacturers. In domestic market
it is doing managed services for BSNL and Idea.

Wipro too has been relying on international market. This year it has signed
an outsourcing deal with Sweden-based SmartTrust that develops software for
telecom service providers. The deal would help Wipro to develop device
management software for easier accessibility of content applications on mobile
handsets. The other deal with Axiom leads to providing IP-VPN management
solution for a Nordic solution provider, using Axiom as a platform. The other
wins include a large field testing contract from a leading telecom equipment
company, and a large multimillion dollar contract from a global telecom major
for setting up and running their next generation CDMA lab.

In India Wipro implemented charging gateway solution and call barring
mediation for BSNL, an HR portal for Hutch, mediation solution for Spice and
Network inventory solution for Bharti. In APAC and Middle East, Wipro
concentrated on application development and maintenance, 3G applications
testing, Data warehousing, MPLS provisioning, and CRM for various service
providers. In Europe and North America market the company bagged key orders in
the domain of IP Broadband services.

Wipro is fuelling its momentum in IP domain, WiMax, convergence, and seamless
mobility. It is keenly tracking the trend towards Linux based Micro-ATCA
platforms, FMC, IMS and engendered services and developing applications in
Mobile Virtual Network Operator context and seamless mobility in the carrier
space.

But the companies that are actively pursuing Indian service providers include
Convergys, Subex and Amdox. CRM deployment in India is restricted to certain
verticals. But telecom is one such vertical where maximum deployment has
happened. Around 40% of telecom companies have invested in CRM tools. Since
subscriber base of service providers is now running into lakhs and customer
relationship management has become complex task, CRM deployment has become
imperative. After the initial phase of euphoria, service providers have realized
that there is more to CRM than just setting up call centers or deploying some
sales force automation tools. It's about getting your wealth-creating
processes in place, which are normally the back-office processes to address
customer needs.

Business Intelligence & Security

Business Intelligence (BI) is another software tool that has been used to
answer business related questions and to provide greater insight into business
issues and pains faced by a service provider.

The Indian service providers are facing a tough challenge of availability of
trustworthy data. Currently, data integrity and quality are the major issues in
the deployment of BI solution in telecom.

Earlier, service providers were not worried about
implementing BI solution as they were busy getting their systems in place but as
this market has matured, quality has become an issue. They are now classifying
customers into different categories according to their buying habits. Here BI is
playing a crucial role.

Players such as SAS and Business Objects are the prominent players in this
space and most of the service providers in India are using their solutions.

On VAS front Bharti Telesoft saw a significant growth in its revenues. It has
generated revenues to tune of Rs 80 crore this year as compared to Rs 47 crore
in 2004-05.

Future trends

In coming days, software vendors will have a larger role to play especially
security vendors. The service providers are moving towards deploying next
generation technologies to their networks, which would be vulnerable to virus
attacks and other rogue programs. Till now it is a clean field. Therefore mobile
security is on the agenda for most of operators around the world, even though
customers are not asking for it.

On the corporate side, the demand is already there. IT managers have
understood the issue. But to the consumers it is like pushing it. In smartphones,
data security issues are similar to those we have in PCs today. Security
software will become 'a must-have' for phones within the next five years.
Companies such as Airwide, Macfee and F Secure have already started approaching
Indian service providers in this regard.

On the messaging front, Skype has already made lot of noise followed by
Google. Analysts have predicted that Google has the ability to launch its own
VoIP services, which could be a potential threat to all the service providers.
Microsoft is also aggressively pushing its telecom plans and is planning to
launch 'Crossbow', which is expected to take aim at the Symbian and
BlackBerry operating systems.

Though, Indian software vendors have been focussing more on international
market, its high time for them to focus on domestic front also.

Rahul Gupta

rahulg@cybermedia.co.in