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