Enterprise Communication: Growth by Sub Segment- Business as usual

Unless the communications infrastructure improves for SMBs in India, there is not much of growth prospects for the enterprise communications segment in the country.

The good news is that newer technologies are finally getting deployed in India as well. Operators are migrating towards software defined and virtualised environments that offer them scalability, flexibility and speed to compete in a hyper competitive environment that is prevalent.

This also means that the challenges in terms of capabilities to deliver newer technologies and at scales matching the requirements of Indian operators, are within the range of large players in the market only. This is diminishing the role of medium to smaller players and has sown the seeds of consolidation in the segment. However, the exercise will benefit the operators and other users in the telecom space by way of standardisation and interoperability as there will be lesser solutions and architecture to manage.

On the business prospects, enterprise communication still continues to be in the range of 10-13% of the total business of telecom operators. There have been series of attempts by all of them to increase the portfolio, but for various reasons those have failed and the Indian enterprises continue to be under-served comparing globally.

One of the main reasons to limited growth in the enterprise communication has been lack of adoption of such services in the Indian SMB. SMBs are not able to find more of business value out of upgrading the communication infrastructure. This makes the CAPEX investment always questionable. However, with cloud based solutions, the pay as you go models are being rolled that SMBs are finding feasible to experiment. At the same time, the need for being connected and opportunities like IoT, M2M, etc., are growing for SMBs as well. So, there is now more of a business justification for them to improve the communications infrastructure. This is creating opportunities for operators to widen the business prospects in the enterprise domain.

Enterprise Networking:
Active Networking Components

The segment saw a modest growth, with both home as well as enterprise users continuing to purchase the networking CPE like switches, routers, WiFi access points, etc. However, in case of home users, there was a considerable amount of cannibalisation due to popularity of MiFi devices like JioFi.

Cisco continues to grow its dominance in the market, especially remaining the preferred choice of operators in the telecom space. From the technology stand point, software define networking and virtualisation has been the focal point. The reasons for growth of software defined solutions include scalability and manageability of the active networking components that the architecture offers. Further, as operators continued to deploy services like video content scalability becomes a critical factor in deciding about the network elements, where virtualised solutions have an edge.

The year ahead will see more new as well as migration deployments for software defined and managed active networking elements. This is also in line with preparation towards 5G, while operators deploy carrier aggregation to increase the throughputs and support wider bandwidths.

Enterprise Networking:
Structured Cabling Systems

Though the segment saw a modest growth, the attention that fibre gained this year has been unprecedented. With NDCP 2018 also endorsing the need of fibre not only in the backhaul but for the last mile as well, the opportunity for this segment is only going to be huge.

Projects like BharNet, etc., are adding to the potential of fibre rollout in the country. Operators are also ramping up their fibre densification projects, especially after Jio has been working on setting up India’s first fibre network having Pan India presence. The market is however getting consolidated as Tier 2 and 3 OEMs are not gaining much of a business with operators preferring to work with suppliers who can, not only supply in large quantities but also provide real time support as these networks go live.

Communication Equipment and Devices: Desk Phones

The rampant use of mobiles in office communication continues to squeeze the opportunity for desk phones in organisations. Large enterprises still continue to have desk phones as their essential infrastructure, the SMBs and SOHOs continue to give up this vestigial telecom apparatus.

The trend might even further go against the prospects of Desk phones in the country cloud telephony is starting to see some traction, especially in the SMB segment. This can let the organisations convert the existing mobile handsets of employees into extensions seamlessly. Further, allowance of VoWiFi could also let organisations deploy their mobile VoIP clients for intra office communications. There are also some early stage developments like deployment of Alexa based voice command solutions in hotels. This is replacing the service phones in the rooms and might see good adoption in the hospitality sector for its right fit in terms of the experience that hotels want to focus on.

It is expected to continue seeing the declining opportunity in the desk phone space going forward.

Communication Equipment and Devices: PBX Systems

The enterprise telecom in India never saw a trajectory even if it attempted to take off several times. At the same time, ITeS segment, one of the biggest large workforce sectors, is also witnessing fundamental business changes, where organisations are becoming leaner. The future software and Internet companies are leveraging advanced IT applications like AI, Machine Learning, etc., where very few people are able to create a very big value proposition.

The cloud based PBX solutions are the way forward as they offer flexibility and are in line with the ICT roadmaps of the organisations to move on to the off-prem architectures and use the traditional hardware as more of a service. The transition has just begun and there have been some deployments based on cloud architecture. This should grow in coming years as the cloudification in telecom ramps up after successfully being implemented in the IT domain. Also, with IP based telephony, the distinction between IT and Telecom is blurring.

Software and Applications:
Enterprise Security?

Enterprise security is becoming a serious concern across the industry. However, in terms of opportunity it is still brewing up. The basic levels of security have been already attained. What will grow as an opportunity is securing exponential number of nodes with M2M and IoT picking up. The security threats that go now beyond the basic viruses, trojans, etc., are not just limited to compromising the data. It now means a direct revenue loss rather than perceived or notional losses. As more of telecom services are now delivered over Internet, public or managed, there are number of threats that are inherent to any such network based services. This opens up a new phase of enterprise security in telecom domain, in particular.

This year saw more of sensitisation about the possible threats. As the operators as well as enterprises start using more of connected services, the deployment of security solutions is only going to increase. The typical enterprise security is getting subsumed in what was being known as cyber security.

The enterprise security within the telecom domain, would be more to handle the perils of being on-net with 24x7x365 uptime. As OTT and other services also continue to merge with the traditional telecom, new dimensions to the security are getting added for which the networking gear also needs to recalibrate.

Another interesting trend is as we see more of virtualisation and software defined networking becoming the preferred choice, especially as we move towards 5G, the security solutions will also have to be centrally delivered which can access networks, nodes and other devices to keep the entire value chain secure.

Software and Applications: Conferencing and Collaboration

Two trends are very encouraging for the future of this segment of telecom. Exponential growth of data and the rise of millennials at the work place. It is not that conferencing and collaboration services are new, but they have not been able to make a mark so far up to the potential. Rather than technology roadblocks, it has more to do with the human and organisation behaviour. This is changing now as organisations are getting refreshed with youth taking charge of how to drive them.

This year, despite so much of activity on data side, exhibited a very flat growth in the segment. It has also to do with the restructuring that Avaya has been up to after bankruptcy. Cisco still maintains the lead in the segment. However, a lot of new age collaboration tools are picking up. Services like Prysm, etc. are catching up in the market resulting in over 36% growth for other players in the segment.

As operators are untiringly attempting to grow their enterprise services along with the growth of new age collaboration tools that is redefining the remote working space, the segment should see more growth in the coming few years. Another growth driver has been integration of mobile as a device to enable collaboration, which reinforces the proposition of on-the-go collaboration, increasingly becoming productive with the enterprises changing the work spaces and making them fluid and taking them beyond a physical layout.

Going forward the conferencing would change into more of collaboration where the purpose would not only be to connect but work together effectively in leverage the overall team skills.