Financial Daily from THE HINDU group of publications
Monday, Feb 02, 2004
Financial Daily from THE HINDU group of publications Monday, Feb 02, 2004 |
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Info-Tech
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Software Wipro gains from higher outsourcing by telecom cos
Bharat Kumar
Bangalore , Feb. 1 THE telecom industry in the West, as a client base for Indian software vendors, is looking up after the extreme slump of the recent past. The recovery here is sustainable, according to Dr A.L. Rao, President, Telecom and InterNetworking Solutions, Wipro Technologies. Speaking to Business Line, he said that it is driven by the increased outsourcing by telecom companies trying to get more value for their spend on research and development and to manage their current products. Dr Rao said that Wipro now has over 3,400 persons in its telecom team - a couple of hundred more than during the peak days of the telecom boom. Telecom equipment makers, accounting for over 17 per cent Wipro's revenues, have contained their losses and achieved positive growth. While R&D spending is flat or increasing slightly, there is more outsourcing happening. New products constitute 30 per cent of the work in Wipro's pipeline from telecom equipment vendors, and this is being driven by original equipment manufacturers' (OEMs) need to get more value for their R&D money. In absolute terms, Wipro's current revenues from telecom clients exceed that during boom-time. On whether increased spending on outsourcing was only a relief rally that would soon halt, Dr Rao said, "No. OEMs have cut R&D to the bone and will lose their core competence if they make any more cuts." He added that the current decision to outsource was to help them manage their product portfolio as well as part of their strategy for new products - be it reducing time-to-market or increasing the number and quality of features their products offer. Current product enhancements and development and maintenance work continue to be the bread and butter of Wipro's telecom and InterNetworking business. However, the company is focused on application development for the coming quarters. For instance, it has developed the user interface for a mobile phone that is to be demonstrated during this quarter. "We have built strong competence on Symbian, on the wireless front, especially wireless voice-based systems," said Dr Rao, speaking of the Symbian competency centre it set up as well as the Ericsson R&D lab. "We are also doing 3G and CDMA-related work, broadband access networking technologies and IP-enabling voice to packet switching technologies." Interestingly, Dr Rao said that most telecom players Wipro had worked with had at least one project with the company even during the slowdown. According to the US-based Telecommunications Industry Association (TIA), overall telecommunications industry spending in the US is expected to touch $963 billion by the end of 2006.
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