Indian telecommunication market at present
The imminence of a host of telecom goodies for the Indian consumer could not have been more pronounced with the expected introduction of 3G and Mobile number portability. Backing this is the huge gamut of international players that keep the market abuzz with announcements of their anticipated product launches. Despite talks of dwindling profits & margins appearing to dent progress claims, continued growth along with news of more evolved services imply that that the industry will continue to tread its present path. Growth fueled by sheer size of consumer base rather than high ARPUs has not only sustained expansion of the telecom industry but has thrown open to many affordable telecom and a variety of lifeline services that come with it.
As consumer needs mature, the telecom industry will move towards a connected world that in a decade will be marked by trillions of networked devices doing far more than enabling simple communications. The connected world will see super-fast, highly efficient networks, constantly connected customers, and new connected devices connecting industries and impacting every single nook and corner of day to day lives. The telecom industry will be expected to outdo itself by continuing to extend to consumers not just everyday voice services but advanced telecom offerings of the connected world that are within their budgets. As difficult as this may sound, achieving this has and will continue to be a possibility. Service providers today need to focus on three primary aspects to keep pace with the industry’s growth and cater to changing demands.
- Expand quicker: by bringing new products and services to market faster, and adopting new, innovative business models faster than their competitors;
- Drive Experience by differentiating through a unique, real-time customer experience;
- Run Leaner by embracing effective and agile operations
In the Indian market context, achieving these core activities of expanding, driving experience need to be done with judicious use of available resources enabling quick investment and movement in wake of new technology offerings and market developments. This in turn leaves service providers with very little room for straddling on non-core functions. Also, it has been observed that specialization of the various activities entailing the entire spectrum of service provider results in efficiency, flexibility and huge amount of cost curtailing literally giving SPs the leanness for more action. The Indian telecom industry today has been therefore been relying on managed services to a very large extent for making quicker progress. OSS/BSS operations are successfully outsourced to strategic partners. These partners in turn are able to deploy IT operations and units for maximum improvement in services offered, network management, billing, consumer concern addressing, new product roll outs and consequently overall consumer experience.
Growth in the Indian managed services domain
The growth in the Indian Managed services market is thus impressive. A latest Springboard report pegs growth in the Indian between 2009 and 2013 at a whopping 22.8% CAGR. While the market had an estimated size of $1.68 billion in 2009, it is expected to touch $3.8 billion by 2010.
At Amdocs 40% of our fiscal 2009 revenue ($1.15B) has come from managed services arrangements globally.
Driving factors for managed services growth
This impressive growth may be attributed to several factors. The foremost being the current growth in the robust Indian cellular market (around 15 million new subscribers per month in 2009). According to Gartner, the market is expected to grow at a CAGR of 15% between 2009 and 2013, with cellular penetration reaching 73.3% in 2013, from 43.7% at the end of 2009.This growth will bring with it several new operators (such as Sistema Shyam, Loop Mobile, Unitech and Etisalat) and significant investments from overseas carriers. This in turn has created fantastic market opportunities for Managed services providers (MSP). Managed services are beneficial in particular for smaller Indian carriers. Managed Services help smaller service providers compete by helping them to reduce their upfront operating and capital costs and allow them to focus/invest in delivering new and innovative services.
High network and IT operating expenses can significantly impact carrier margins, therefore new carriers will increasingly opt for an OPEX model by outsourcing network and B/OSS and service delivery platform (SDP) elements. For example in 2008, Aircel outsourced their IT functions to Wipro, including retail billing and revenue assurance.
Impact of next generation technology on managed services
The 3G and Broadband Wireless Access (BWA) spectrum and the advent of WiMax and LTE based 4G technologies are expected to play a crucial role in shaping the broadband industry in India. They will drive adoption of Value Added Services (VAS) and enhance data revenues for carriers. According to Frost & Sullivan, the VAS market for 3G in India is expected to be $1.26 billion and will grow at a CAGR of 21.70% during the financial years 2010 - 2016.
As a result, service providers will need to partner with MSPs to leverage enabling B/OSS capabilities and operations expertise to allow them to deploy new 3G/4G infrastructure, support systems and services faster than their competitors. In addition, providers will look to leverage the ongoing R&D/investment that MSPs are making in new technologies and platforms to provide a richer portfolio of applications and enable improvement in data ARPUs
New technologies in the managed services domain
The evolution of managed services has brought with it a variety of platforms for next generation end user offerings. Managed Services today provide a platform for
- 3G & WiMAX services like Internet Protocol television (IPTV) service, mobile television among many other rich-media services on new devices such as iPhone
- Delivery of video such as mobile video, enterprise-managed video and IPTV
- Mobile remittance and micropayments with billing and call center support
- Shared core network outsourcing will continue to see an upward trend
Challenges
Despite the huge range of benefits that Managed Services provide, there are certain challenges the Managed Services industry faces. The dynamism in the Indian telecom industry has resulted in constantly changing demands of the managed service market. Any successful service provider has a demarcated audience. Communicating the benefits of Managed Services to this entire spectrum of service providers in accordance with their target audience can be seen as a challenge.
It is thus imperative for a MSP to communicate to service provider the benefits of managed services that include massive support in
- Developing and retaining customer loyalty
- Complying with new regulation
- Transforming to a multi-play provider
- Reducing development costs for new services
- Extending Financial Operations Efficiency
Conclusion
The success that the managed services model has seen in several developed and developing markets is testament to the fact that there is a lot that the Indian telecom industry can benefit from. It is important that the industry uses the latest technological offerings from the managed services domain to extend to consumers a better and larger range of telecommunication services, taking the Indian telecom revolution to new heights.
Erwann Thomassain, Director, Account & Regional Marketing, Asia-Pacific, Amdocs