Working out of mega facilities in the leafy lanes of Bangalore or Hyderabad, in Chennai’s special economic zones, or the mall city of Gurgaon, telecom engineers and specialists are labouring hard to deliver cuttingedge technological advances and value additions that will help their companies ?? in most cases, half a world away ?? steal a march over rivals in the highly competitive telecom industry. In the past decade, the perception of global companies towards India has undergone a sea change. With the country’s mobile industry second only to China in its offer of a lucrative and relatively untapped market, India is increasingly being viewed as a hotspot for top-of-the-line research and development (R&D) work.
A part of the perception has to do with multinationals looking to expand here. With India’s telecom sector adding over 10 million subscribers a month and a vast rural potential still remaining to be tapped, an “India strategy” features high on the business plans of most global telecom majors, including Motorola, Ericsson, ZTE, Nokia Siemens Networks (NSN), Huawei, Alcatel-Lucent as well as handset makers like LG and Sony Ericsson. The strategy includes both manufacturing (as stipulated by the government to bid for operator tenders) and R&D facilities, which enable “ease-tomarket” innovations.
A certain degree of cost effectiveness ?? in the region of 30 to 40 per cent ?? is involved as well. The availability of a relatively low-cost pool of engineers from reputed institutions like the Indian Institutes of Technology, the Indian Institute of Science and the National Institutes of Technology, have attracted global companies to set up and expand their R&D bases in the country.
At present, most of the global vendors have R&D facilities in India. The new wave is to expand the units substantially. This is being driven by the fact that the world’s second largest wireless market is gearing up to auction licences for offering high speed services on the 3G platform, and this is causing a flurry of interest amongst telecom infrastructure providers to lead the race for new businesses.
To accomplish this, equipment makers are looking to differentiate their products on price points or technological advancement, or a combination of both. This competitive advantage is driven mainly by the R&D initiative of the vendor. Dr D.K. Ghosh, chairman and managing director, ZTE India, puts it concisely, “Nowadays, companies develop products that are market driven, and hence R&D assumes greater significance.”
tele.net takes a look at how global telecom equipment makers are gearing up for the next level of competition, their investments in R&D and their future plans…
Alcatel-Lucent
In September, leading technology provider for fixed, mobile, broadband and IP, Alcatel-Lucent, set up a state-of-the-art IP Transformation Center (IPTC) in Chennai. A first-of-its-kind centre on the subcontinent, the centre will help develop, integrate and test end-to-end IP networking solutions for Alcatel-Lucent’s Indian and global customers as they migrate to next-generation architectures.
The IPTC, an extension of the company’s R&D efforts, will enable service providers to test and integrate their solutions in a risk-free environment. This will help Alcatel-Lucent to shorten the IP transformation trajectory and time-tomarket, while allowing the company to keep costs under control and focus on serving its customers.
The IPTC at Chennai hosts about 50 technologies. It is networked with AlcatelLucent’s existing IPTCs and network integration centres located in Antwerp (Belgium), Singapore and the US, as well as with multiple R&D labs worldwide, including India. These centres will share knowledge, resources and best practices to help service providers execute their IP transformation projects.
In India, Alcatel-Lucent’s R&D activities rely on 2,700 engineers and scientists working in 100,000 square feet of lab space. It has a Bell Labs research centre in Bangalore and major software development centres at Gurgaon, Noida, Chennai, Bangalore and Hyderabad. AlcatelLucent is also part of a joint venture with the Centre for Development of Telematics (C-DOT) based in Chennai, for the deve opment of broadband wireless access solutions like Wi-Max.
NSN
In April 2009, NSN opened a Global Network Solutions Center (GNSC) in Delhi, in response to the growing demand from operators to outsource network management and maintenance. The centre has been designed to serve as the company’s global services hub and is an addition to existing GNSCs in Lisbon, Portugal, and Chennai.
With a workforce of more than 8,000, NSN has a presence in more than 200 locations in India. According to the company, the creation of a central hub to manage R&D and manufacturing to offer a unique and centralised global delivery model is part of its strategy to strengthen its presence in emerging and developing markets worldwide.
In 2007, NSN had announced a threeyear $100 million investment plan for India, and subsequently set up a development centre in Bangalore and a manufacturing plant in Chennai. These are apart from the sales and marketing offices in Delhi NCR and another manufacturing facility in Kolkata for producing fixed network equipment.
ZTE
ZTE’s core strength is R&D. This has enabled the company ?? a global provider of telecom equipment and network solutions ?? to offer cheap products in the global market without compromising on quality.
The company, which already has an R&D facility in Bangalore, is planning to expand and strengthen further. “It is necessary to constantly invest in `brain power’ to compete in the global market,” says Ghosh.
The China-based company has 16 R&D centres, of which seven are outside China in countries like the US, Sweden, France, India and Pakistan. With 10 per cent of ZTE’s global revenue coming from India (China contributes 30 per cent), it makes sense to step up the investment and manpower (currently 1,600strong) in the country.
Over the coming year, R&D in India will have a special focus as the company’s lab will give more emphasis to other valueadded services (VAS), including data and content solutions, voice solutions, messaging solutions and open platforms. It will also work on technologies for “voting on telephone” for the Indian market.
LG Electronics
A leading handset maker, LG has, in recent years, given global majors like Nokia and Motorola a run for their money in the handset segment. For the company, R&D is crucial to keep ahead of competition. In India, LG Electronics ?? the holding white goods company ?? has an R&D centre in Bangalore that employs over 1,000 engineers. In the past five years, the company has invested about Rs 2 billion on R&D and Rs 4 billion every year on marketing. Going ahead, LG is looking to double its investments in R&D to Rs 4 billion. Of this, 30 per cent or more will be diverted towards innovations in handset designs and VAS. After all, the company is planning to double its market share in India to 11 per cent in the GSM mobile telephony market. In 2009, the company plans to launch nearly 50 handsets for Indian users.
Huawei
Huawei’s R&D centre in India extensively supports the company’s global operations. According to the company, the Bangalore centre is a tangible example of the potential of combining Indian software with Chinese hardware for global use.
Employing over 1,600 Indian engineers, the centre is the largest overseas development centre outside China and a key platform and component development delivery centre for Huawei. Recently, the company filed for 200 patents from its India R&D centre, which, according to the company, has emerged as one of the key intellectual property generators for the company.
Huawei invested over $2.2 billion globally on research during 2008; a big chunk of it was earmarked for India, where the company continued to expand its operations with an accent on localisation. The India centre is engaged in developing telecom solutions for next-generation networks, network management, platforms, mobile handsets and applications. Towards this end, the company will be hiring about 500 telecom software engineers and invest an additional $100 million for another development centre in Bangalore.
Others
Telecom equipment maker Ericsson is also banking on R&D to understand local needs and retain a leading position as India readies for 3G. “We are looking forward to the introduction of 3G in India; we have full intentions of maintaining our leading position,” says Ericsson’s director, government and industry relations, Per-Olof Bjork. In India, Ericsson spends 16 per cent of its sales proceeds on R&D, which, according to company officials, is very high ?? “perhaps the highest”.
For companies like Beceems, a global provider of semiconductor chips, solutions and technology, making inroads into India’s potentially lucrative Wi-Max market is good business strategy. Already, the company’s chipsets are being increasingly deployed to build commercial mobile WiMax networks in Asia. Today, the company not only has a manufacturing unit in the country (where Beceems fabricates 33 per cent of its total production of chipsets), it is also investing heavily in its R&D centre at Bangalore, which employs more than 130 engineers.
However, despite the increased interest in R&D, the investments coming into India are still relatively small compared to other Asian countries. This is perhaps why the government is aggressively positioning India as a telecom R&D destination. If the overall investment climate and other infrastructural requirements improve, India’s telecom industry will become even more attractive to global vendors.
