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IBM India: Leveraging technology to deliver value

July 04, 2016

The Indian telecom industry has witnessed rapid liberalisation and growth since the 1990s and has now become the world’s most competitive as well as among the fastest growing telecom markets. The industry has kept pace with fast evolving technologies to ensure that consumers in India enjoy an experience that is at par with that of consumers worldwide. The rapid growth and evolution in the industry has led to challenges such as maintaining the customer base, sustaining operations, improving margins and driving new growth.

To help telecom companies deal with these operational challenges, IBM, a global information technology (IT) service provider, has developed solutions that focus on improving operators’ business performance. The company’s portfolio of offerings for the telecom industry includes digital transformation, enterprise excellence, network and IT agility, connected customers and agile enterprises. All these enterprise solutions are aimed at enabling operators to service the end-consumer profitably.

India as a key market

IBM has a long history in India, going back to the 1950s. In the early decades of India’s independence, the country’s IT industry was served mainly by IBM. The company had to exit the country in 1978 due to regulatory issues, but it scripted a spirited comeback in the early 1990s. After a few changes at the promoter level, the company finally emerged as IBM India in 1997, a time when the country was witnessing a telecom revolution.

Since then, India has emerged as a strategic base for the company’s global service delivery network. Within the country, telecom continues to be one of the most significant industries for IBM. “We are proud that we support more than 70 per cent of Indian telecom subscribers by means of serving the top telecom operators in India,” says Sreejith N.S., delivery partner, IBM.

A landmark deal that IBM signed in India was a 10-year contract with Bharti Airtel in 2005. Under the agreement, IBM agreed to manage the latter’s hardware, software, IT management, billing, customer relations and data management in exchange for a percentage of future revenues, which were expected to total $750 million over 10 years. The contract enabled the two companies to build on each other’s resources for a complementary partnership and capitalise on market opportunities.

IBM followed up this deal with similar agreements with other leading telecom operators in India, including Idea Cellular and Vodafone India. It managed to partly renew its contract with Airtel after it expired in 2015. Reportedly, IBM’s annual revenue from the outsourcing deal with Airtel will come down from $250 million-$300 million a year to $100 million-$125 million a year after the renewal. Also, the tenure of the contract has been reduced from 10 to 5 years.

The company is also negotiating for a similar renewal from Vodafone India, believed to be one of IBM’s largest contracts in Asia. Although it is expected to retain most of the contract, the company may have to cut its cost in the face of increasing competition from other IT players that are aggressively vying for a place in the Indian telecom industry.

Keeping pace with changing needs

The telecom industry is witnessing a convergence of voice, data and video networks. This is having a major impact on telecom companies, infrastructure and platforms. Data has arguably become the main source of revenue for most telecom operators. “In order to align our service offerings with the changing market and business demands, we have put in a lot of thought and research (including feedback from our customers) to repurpose our portfolio of offerings. Most importantly, we have been consciously focusing on introducing cutting-edge research innovations to bring more agility to our service offerings,” says Sreejith. The company is working on new solutions and offerings such as new use cases in software-defined networking/network function virtualisation, and cognitive and internet-of-things solutions.

The company is of the view that the industry will come under increasing pressure due to the ongoing expansion of the mobile ecosystem, coupled with demand for high-bandwidth applications and services such as video and gaming. To meet the growing consumer demand for quality broadband connectivity, operators will continue to pursue technological advancements. Moreover, as per recent industry reports, India is expected to have 700 million internet users, of the total 4.7 billion global users, by 2025. In addition, with the government’s favourable regulation policies and 4G services hitting the market, the Indian telecom sector is expected to witness rapid growth over the next few years.

Although IBM faces increased competition from domestic IT players, the company is well placed to leverage the emerging opportunities in the industry, given its unique service offerings and rich experience in serving the Indian telecom sector.

 
 

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