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Riding on the IT boom, the telecom vertical has redefined top lines of many IT vendors. Whether pure play telecom software providers or IT companies like Wipro or Infosys, telecom has emerged as a leading practice with solutions cutting across OSS/BSS to building custom specific applications. The telecom software market grew by 55% during FY '06-07, garnering revenues of Rs 17,871 crore. As usual, the front line IT companies took a major chunk of the revenues with TCS topping the charts. Another star performer was Tech Mahindra, which saw revenues soaring by 136% compared to the previous year.

Star Performers
The OSS/BSS space continues to be hot as it provides companies the opportunity to offer an umbrella of services. Also, this is the space where large telecom players need to efficiently deploy IT for several transactions like online billing and providing value added services. Competition and consolidation on the telecom space puts IT in the driver seat because when competitors become partners, there is a huge overhaul in terms of IT, as right from software to hardware, all digital assets have to be seamlessly integrated. As consolidation escalates both from an operator and vendor perspective, telecom software providers are bound to get new avenues for growth in the ongoing year. The major share of revenues still remain global centric with domestic opportunity coming from players like Airtel and others.

Players in the fray
For TCS, the revenues from telecom stood at 17% of the total, and it saw good growth for its offerings. Large transformational and long term SI contracts have been key revenue pullers for TCS. The company also had significant growth in existing accounts due to cross-sell opportunities and new offerings. In addition, TCS also expanded its services and new engagement with clients in the Apac and Middle East markets. Yet another significant event for TCS over the year was securing the grand prize in 'Qualcomm's Wireless Reach BREW Application Funding Program'. The grand prize included a grant, and Qualcomm will also use additional funds to put TCS' proposal into action through a new or existing wireless reach project. TCS also saw increase in demand from customers for system re-engineering and system replacements. There has also been a demand for new systems with focus on providing next generation services, content management and delivery.

Meanwhile, Infosys also saw its telecom practice getting bigger compared to the previous year, clocking 71% growth. Infosys' traction in telecom becomes evident when we look at its impressive list of clients. Of its 40 customers, Infosys has 15 original equipment manufacturers (OEMs) and over 25 non-OEM telecom companies. Its technology expertise comes to fore when we look at some of its deployments. For instance, it created and launched a global VoIP service platform to a leading ISP. For another client it delivered key CRM and OM systems for FTTP (Fiber-to-the-Premise) to enable rapid time to market. Infosys also executed high-end deployments like designing next-generation network platforms cutting across MPLS, metro Ethernet and OSS for one of Europe's largest service providers.

Overtaking all vendors in terms of growth, Tech Mahindra had a spectacular year posting a whopping 136% growth as compared to the previous year. It deepened its relationships with key customers and secured the largest deal in the history of the Indian IT industry by signing a five-year $1 bn deal with the BT Group. Meanwhile, it added 21 customers.

For Wipro which has strong domain expertise in the telecom space, Embedded Telecom Software turned out to be a major revenue driver. Vendors like HCL Technologies saw notable growth in their telecom practice HCLT posted Rs 915 crore in revenues successfully opened a delivery center at Hyderabad focusing on the growing delivery needs of the telecom vertical.

In the telecom space, HCL has initiated a number of new engagements that are strategic in nature and have the potential of becoming multi-million dollar marquee accounts. The new clients span across various micro-verticals in telecom, ranging from communications service providers in Europe, Apac, and the US to OEMs and ISV clients in Europe and the US.

Vendors like Sasken, an embedded communications solutions company which provides software products on embedded software IP for wireless mobile devices, cover all communication and application sub-systems for OEMs and ODMs. Sasken has flexible and complete software solutions, spanning phone segments from low to mid, high and 3G phones that help customers bring out well differentiated phone models, with faster time to market and lowest TCO.

During FY '06-07, Sasken signed up with Lenovo Mobile for its application framework. This win was considered important being a royalty bearing engagement on this product line, apart from being a reference customer viewpoint as well. Meanwhile, Motorola has licensed Sasken's Multimedia software solution for its Symbian/UIQ platform. NTT DoCoMo, Japan also has announced a new FOMA P903iX mobile handset developed by Panasonic Mobile Corporation (PMC) in Japan with Sasken's Multimedia Solution; this is a royalty bearing engagement, and the phone was launched on April 2007.

Subex Azure derived good growth organically and inorganically during FY '06-07. A key achievement was the acquisition and integration of Azure Solutions, UK. This was a transformational transaction and the real impact will be seen in FY '07-08. The product portfolio from Subex Azure caters to the OSS needs of any telecom service provider. Yet another development over the year relates to Flextronics Software Systems (FSS) becoming Aricent. The company is a full-service, full-spectrum communications software company. Hence, the year that went by was one of consolidation for Aricent as it invested its energies in transforming its operation under the new name. Aricent has more than 350 clients worldwide. Other vendors like Bharti Telesoft also grew impressively The high point was for the company to be recognized by Deloitte Technology as one of India's Fast 50 growing companies.

Outlook
As India leaps ahead adding millions of mobile customers every quarter, there is constant pressure on telecom operators to ramp up their backend infrastructure. Though telecom is more about networks, what brings alive these network is the software part. According to industry experts, there is a fundamental shift in the telecom business' economics. Telecom operators have seen their margins dramatically shrink as the business models have changed from a regulated market to a relatively free market. The challenge, therefore, is building a strategic framework that fosters sustained profitable growth. Hence, the key to success is more volumes and add-on subscribers, and delivery of various services hinges on a stable IT backbone that has to be agile and flexible to take future demands.

Vendors like TCS foresee big opportunities in areas like IP and broadband networks, next generation mobile services, IT/IS operations. Some of the focus areas of vendors in the ongoing year would be SOA enablement, service and product portfolio management, NGN/IP migration, product engineering and conformance testing, broadband and VAS (mobile TV, speech technologies) and mobility (mobile enterprise applications, mobile broadcasting). Clearly, the telecom industry is at an inflection point today. Forces like convergence, VoIP, etc are rapidly reshaping the industry. Vendors also foresee a number of challenges and opportunities both in the domestic and global perspective going forward.

Vendors like Bharti Telesoft are bullish on emerging mobile applications like m-Commerce and product and solution areas such as content-based services, value added services and business support systems. M-Commerce is indeed a new and exciting area. As new possibilities emerge in the areas of Live TV and various new video applications, such as video mail and video surveillance. The year ahead looks more promising .

Shrikanth G
shrikanthg@cybermedia.co.in