A flurry of services

Miles away from his home in Australia, Drew Kelton, the President of Bharti Airtel's Enterprise Business sits in his Gurgaon office and occasionally plucks at his guitar whenever he wants to relax. The high profile executive was roped in by Airtel in July 2010, from Telstra, for only one purpose – to transform Airtel's enterprise business from a connectivity provider to one offering a host of services to corporates in India. So over the past year Airtel has announced a number of partnerships with the likes of Savis and VMware to offer managed IT and cloud services to enhance the value to its corporate clients.

“My objective is to make managed services a key part of our enterprise business. This is being driven by growth dynamics of the industry where, on one hand, corporate customers are demanding a single-window solution and on the other hand, it helps us to increase customer retention. Providing a broader suite of services increases stickiness,” says Kelton.

Like Airtel, other large Indian telecom companies including Tata Communications and Reliance Communications are also engaged in transforming their dumb network pipes to build layers of services on top of them.

“Three years ago we took a decision to move from being a network company to offer all services which are required by corporate. So we have now built an array of offerings including managed services, data centres, data security, telepresence and cloud. There is no option but to make this transformation,” says Srinivasa Addepalli, Senior Vice-President (Corporate Strategy), Tata Communications.

While enterprise customers' growing needs are forcing this change, Indian telcos are speeding up this transformation due to a bigger threat – the one from large global service providers such as BT, AT&T and Verizon.

These big boys of enterprise communication had started making inroads into the Indian market three years ago. (See eWorld report ‘Zooming In On New Game' dated April 14, 2008.) Their entry was driven by the growing number of multinational companies setting up shop in India. But in addition to foreign MNCs, slowly these global players have been able to get contracts from some large Indian multinational companies, until now considered assured business for the Indian telcos.

Check out these facts. Paris-headquartered Orange Business Services has more than 600 customers in India including a large number of local companies and State Governments. Cable & Wireless has 10 of the top 15 BPOs in India as its clients. AT&T's India business is growing at a CAGR of 30 per cent since it got a licence four years ago even as the industry is growing at only about 8 per cent. And BT boasts of having the likes of Wipro and TechM as its customers.

Bala Mahadevan, CEO - India, Orange Business Services, says, “Our customer base in India has seen a significant increase in two areas. First, on the network connectivity side, we are witnessing the global expansion of many Indian companies, and hence the international connectivity needs are expanding. Compared to a traditional international customer base which has offices in India, the trend is now two-way with Indian companies expanding.” The French company is aiming for a four-fold revenue growth in the Indian market by 2015.

Cable & Wireless has 150 customers in India with some major wins last year. “In 2010-11 in India, we have closed seven large enterprise deals, secured a new contract with one of the top three Indian banks, signed up with two of the top BPOs in the country – including Mphasis – and achieved a strong performance with some our existing global accounts,” says Shali Thilakan, Managing Director, India , Cable & Wireless Worldwide.

These global telecom firms are driving a multi-pronged strategy with the services piece at the core. As it is they have network infrastructure that is spread across the globe to cover more than 100-150 countries. On top of that they have built a battery of services such as MPLS, Ethernet, unified communications, CRM, virtual data centres, virtual private networks, and hosted IP telephony. In addition they are earmarking more resources to ramp up their presence in the region.

BT (formerly British Telecom), for example, recently embarked on a regional expansion plan as 80 per cent of its largest customers by company turnover are expanding in Asia, with the majority expanding aggressively into India. “Our customer-led investment programme is designed to support the growth of large enterprises in this region, ensuring we are able to provide businesses with a broad suite of propositions and professional services that are the same wherever they operate,” says Sudhir Narang, Managing Director, BT India. BT was among the first global players to announce the intent to target Indian corporates. The company had said it would achieve a target of $250 million in this market. Though BT does not want to say whether it has been met, market analysts said the British firm's revenues have gone much beyond this number.

Not to be left behind, US telecom major AT&T is also expanding into more Indian cities. “We are enhancing the nodes in Hyderabad, Mumbai and Bangalore. We are continuing development of managed hosting and infrastructure services capabilities, enhancing AT&T Telepresence services with new Telepresence rooms in AT&T's offices in Delhi, Bangalore and Hinjewadi, Pune and capitalising on network expansion and subsea cable investments to improve capacity and diversity. A case in point is the recent Europe India Gateway cable implementation,” says Gopi Gopinath, Chairman and CEO, AT&T Global Network Services India Pvt Ltd.

While Indian telcos are relatively new to the services game, to protect their turf they are leveraging their strong domestic network to cross-bundle other telecom services. “We are not just an enterprise service provider, we have data services, mobile services and fixed telephone. We offer a package deal. If a big MNC needs all these services in India, where will it go? To Airtel or to a global service provider?” poses Airtel's Kelton. Airtel boasts of MNC clients including Intel, Thomson Reuters and Goldman Sachs.

Indian telcos are also betting on their ability to design low-cost business models to deliver services targeted at new segments such as the small and medium enterprises. Tata Communications, for example, was the first to start the concept of public Cisco Telepresence rooms. Compared to millions of dollars required to set up a private Telepresence room, these public facilities are available on an hourly pay-per-use basis, and located in central business centres. This approach increases the market pie for the Indian telcos because the global players are in no position to go after the SMB market or the mobile enterprise segment.

To take the battle further into the foreign operator's camp, the Indian telcos have opened up another front by competing in the international emerging markets. Tata Communications, which had bought undersea cable systems such as Tyco Global a few years ago, is leading the charge. “We cannot compete with the global players in markets like the US and Europe as it is their home turf but we are there in neutral countries such as South Africa and South-East Asia. We cannot compete with them on global connectivity but we are strong in services like multi-location telepresence and data centre solutions,” says Addepalli. Both Airtel and Tata Communications are moving into Africa and West Asia in a big way.

But the global players are not too concerned yet as Indian telcos still have a lot of catching up to do. “Many carriers have partnerships with solutions companies to offer one-stop managed services solutions. However, AT&T's advantage is that we can do this just about anywhere in the world and provide consistency of service wherever a multinational company operates,” says Gopinath.

Back home, Indian telcos are looking to innovate in value addition. For example, Airtel, which has more than 160 million mobile customers, is exploring the option to link enterprise customers to the retail consumers to take services to a whole new level. The operator is in talks with one of its MNC enterprise customers – a global healthcare technology firm – to leverage the new b2b2c model. While this may not add anything financially to Airtel, it is hoping that giving access to its retail customers could be of value to its enterprise customers – something the global players will not be able to emulate. If this strategy succeeds Kelton may be able to play his guitar more frequently.

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