Time to move up for Telecom Software

While last year, a lot of telecom software vendors took a plunge, the trend
is on the upwards again.

Taking the top position this year is Wipro, which posted a turnover of Rs
4,631 crore, growing at 12% from last year and garnering a market share of
around 17.2%. A part of its growth is attributed to the five-year contract that
it has won from Atheeb Telecom. The company was also awarded a
multi-hundred-million long term outsourcing contract from Unitech Wireless for
creating a next generation telecom company, which also attributed to its
success.

Tech Mahindra came second, posting a 3% growth. Its revenue stood at Rs 4,400
crore. The company has bagged major deals to provide customer care services to a
service provider in India, which fired up its revenue for this year.

TCS, the third player in the rankings, posted a growth of 3.1%, posting a
revenue of Rs 4,365 crore. The vendor was awarded major deals from government's
SWAN project last year, a project that attributed much to its success.

The need for software services within the telecom sector has been steadily
increasing over the years, especially with the demand for telecommunication
services. The overall outlook for the telecommunications software industry has
been positive this year. From a geographical perspective, emerging markets and
the US are expected to show continued buoyancy. The European markets are yet to
pick up pace in this segment.

Growth Assured

Billing software took a downward plunge last year due to the recession.
Although the market for this particular segment has picked up again, it is
expected that revenue from this sector will not be escalating dramatically until
the end of 2010. Communication service providers (CSP) in developed countries
have been investing heavily in customer care solutions for the past five years.
In developing countries with high prepaid mobile focus and generally lower ARPU,
customer care currently gets less focus and less investment than in developed
countries. But this will begin to change as CSPs start giving a little more
attention to their customer care churn.

Spending in the mobile service segment will increase each year as CSPs
prepare to support mobile data growth and content based services. This is being
driven by the availability of smartphones, the completion of 3G RAN upgrades and
a rapid growth of subscribers signing long term contracts for data services.
Hence, the service assurance sector is also poised for growth this year.

The main factors driving service fulfillment are competitive pressures to
rapidly enable new services, subscriber growth in emerging market CSPs and a
push to automate fulfillment to keep opex down. In developed markets, CSPs are
pushing fulfillment automation into new areas.

Finally, according to experts, the main factors for the expected growth of
the network management services, are the expected growth in mobile data and
broadband services, emergence of new mobile technologies, continuing fierce
competition and network transformations.

Trends Galore

In terms of service offerings, there is increasing traction for integrated
offerings in BPO and in total outsourcing. Additionally, there are a number of
large transformation opportunities, which will mature as companies go through
the next investment cycle. During the slowdown, various vendors decided to build
offshore capabilities. However, with the return of discretionary technology
spending, vendors are now once again focusing on onsite work. The rise in onsite
work is largely an indication of the rise in discretionary spends, driven by
consulting and package implementation. This requires IT firms to provide
services at the client's location. Though onsite work is billed higher, the cost
of delivery is high as well. Thus, margins from onsite work are lower than
offshore.

While large clients are still preferring to appoint two-three vendors for
large, transformational deals, some vendors have managed to bag large deals as
the only vendor on the back of full-service offerings of IT, technology and
operations. Companies are increasing their focus on bidding for deals that are
driven by outcome based pricing.

Vendors in the Fray

During the slowdown, TCS increased its offshore capabilities. By the end of
FY 2008-09, when the Indian IT industry started feeling the heat of the global
financial meltdown, TCS had its offshore component at 41.9%. Since then, the
firm consistently focused on offshore work, taking it to about 51% by the end of
FY 2009-10. But now, the vendor will once again be focusing on the onsite.

On the deals front, TCS announced that its new partnership with 3Com. Under
this deal, 3Com will provide high-end enterprise switching, routing and security
solutions for TCS. Subex, a leading global provider of operations and business
support systems (OSS/BSS) for communications service providers, has recorded a
revenue of Rs 463.1 crore.

The global IT services business of Wipro announced that it has partnered with
Atheeb Telecom for deploying an end-to-end IT solution covering OSS/BSS and the
underlying infrastructure components. As part of the five year contract, Wipro
will deliver next generation services through business-IT alignment. The
platform from Wipro will allow Atheeb Telecom, to launch a host of services
including WiMax, content-based services. Wipro has deployed the following
systems: enterprise portal (Pitney Bowes), lightweight CRM, GIS (Intergraph),
billing (Oracle OCBRM), provisioning and activation (Oracle ASAP), inventory
(Oracle UIM), service management (BMC Remedy), fault management (Netcool), EMS (HPOV),
performance management (Infovista), interconnect (Subex Concilia), mediation (Wipro
OSSSmart) integrated through BPM/EAI ( SUN JCAPS). A billing trial and soft
launch of services has already been done.

Wipro was also awarded a multi-hundred-million long term outsourcing contract
from Unitech Wireless for creating a next generation telecom company. Unitech
Wireless, with licences to operate in all twenty-two circles across India, is
launching telecommunication services to provide advanced wireless voice, data
and ILD/NLD services. Wipro will deploy component based service delivery
platform (SDP) for Unitech Wireless to deliver wide range of services including
multi-channel access, real rime information delivery, multimedia content and
VAS.

In the international market, Amdocs has acquired mobile payments and
messaging aggregator MX Telecom for $104 mn. The all-cash deal will see MX
Telecom become part of Amdocs' OpenMarket mobile transaction hub. OpenMarket
provides a hosted platform to extend operators' mobile payment and messaging
capabilities through an integrated network and product portfolio.

Tech Mahindra also saw some positive outcomes this year. Tech Mahindra
successfully delivered a system integration solution to a multi-service
broadband communications and entertainment company in North America. This
solution enables the customer to add wireless offerings to its bundle of
entertainment and communication services and capture greater market share.

They have entered into an agreement with a telecom service provider in India
to provide customer care services. Additionally, the company has been chosen by
a large telecom operator in North America to provide application support
services across multiple business critical applications. This multi-year
engagement will lead to resource and process optimizations for the client.

Rural Aid

TCS won the country's largest state wide area network (SWAN) project from
the Government of Andhra Pradesh on a five-year build, own, operate, and
transfer (BOOT) model. This is the fourth SWAN project that TCS has bagged in a
row. TCS is also implementing SWAN projects in other Indian states-Chhattisgarh,
Tamil Nadu, and Bihar. The proposed SWAN project will enable the Government of
Andhra Pradesh to start and run various e-governance projects and citizen
services. This will bring about significant efficiencies in G2G and G2C services
of the state, which in turn will help in bringing complete transformation in the
e-governance structure. The project will be rolled out in twelve months and TCS
will then maintain it for five years.

Qualcomm and Azim Premji Foundation announced an initiative that will advance
web enabled educational content and provide wireless broadband access to certain
rural and government run schools in India. The initiative, in its pilot phase,
will connect close to forty government run schools in underserved communities
across four states-Gujarat, Karnataka, Orissa and Rajasthan. The project is
aimed at impacting government schools through provision of wireless broadband
technologies and facilitates enriched learning experiences for students through
engaging web enabled and regionalized or contextualized educational content that
can be easily updated and disseminated broadly.

Madhura Mukherjee

madhurak@cybermedia.co.in