Getting it Right

Telecom as a vertical is becoming a booming business opportunity for IT
service companies and pure play solution providers. FY 2007-08 saw the telecom
vertical growing with operators adding new customers.

While OSS/BSS continues to get a major chunk of the software pie, many
operators had unique requirements that kept the demand for telecom software in
the pink of health. Except a few, almost all IT services companies offered
solutions cutting across segments. The telecom software market is indeed
macroscopic and provides ample opportunities for solution providers to either
provide a product-based or a solution-centric offering.

Ground Realities

The market became more competitive in FY 2007-08 because there was a high
degree of consolidation over the year. And when two companies merge, it also
brings along IT integration issues; and only IT solution companies that had deep
domain expertise were able to make a mark in this space.

According to VOICE&DATA analysis, telecom operators, over the last year,
looked at developing new business models and networks and providing new services
to subscribers-transforming from mere telecom operators to communication service
providers. Moreover, the main objective of the leading service providers
revolved around increasing market share and customer retention, hence, in a way,
they were forced to offer more value-added services and innovative post-paid and
pre-paid plans in the cellular business.

Vendors in the Fray

TCS maintained the growth momentum over the year. The primary growth drivers for
TCS in the telecom space came from large transformational and long-term SI
contracts. Meanwhile, it also saw significant growth in the existing accounts
due to significant cross-sell opportunities. It also expanded its service
offerings and gained new engagements in the Apac and Middle Eastern markets.

TCS bagged a major deal worth $70 mn, with one of the world's leading telecom
companies to provide product engineering and R&D services for its operations and
software business unit in Europe.

Tech Mahindra continued its growth with its ability to forge long-term deals.
With this strategy, the financials of Tech Mahindra looked great at the end of
the year. The company recently signed a $350 mn deal with BT for handling a
large part of the application support and maintenance function of its IT estate
for a period of five years that placed Tech Mahindra right at the heart of BT's
strategy for delivering service excellence to customers in the UK and across the
globe.

In the BSS domain, Tech Mahindra has won an engagement to provide adjunct
rating, data warehousing, business process management, and billing
reconciliation solutions to a leading GSM operator in Kuwait.

For Infosys, the telecom slice is getting bigger by the year. With some of
the biggest global telcos as its clients, Infosys' key emphasis on telecom
domain is improving the efficiencies of its clients.

Wipro's telecom services business grew significantly in FY 2007-08 with major
traction from Asia Pacific. Its European business also grew significantly across
service lines. In terms of key developments over the year, Wipro secured a large
transformational outsourcing deal from Aircel. It also garnered a large
greenfield implementation for a leading service provider in the Middle East.

Meanwhile, Sasken also had a good year. It added six new customers this
quarter, taking the total number of active customers to 89. It entered into a
partnership with a leading provider of high-availability platforms to provide
middleware solutions for content delivery and application hosting platforms, and
made significant inroads into a market leading tier-1 vendor.

Subex is another company that has carved a niche over the years. But FY
2007-08 was a rough year for Subex in terms of expected financial performance.
The company cites that one of the main reasons for a not-so-good year was the
reduction in capex of one of its key customers and the resultant postponement of
contracts. However, the company is bullish on FY 2008-09 with successful
integration of Syndesis.

Outlook

The outlook for the telecom software space remains bullish for FY 2008-09.
Telecom software service providers will launch more services aimed at areas like
revenues optimization, improving operational efficiencies, and solutions that
pave the way for effective OSS/BSS. Today, software has become a critical part
of the telecom business, and this makes the vertical bigger every year and in FY
2008-09 some of the experts aver that it will come on a par with BFSI.

Shrikanth G

shrikanthg@cybermadia.co.in