This was a fiscal in which only those who were able to deliver the goods in the niche technology domains picked up the market share. Whether it was in VSAT, contact centers, wireless or network security, the networking industry presented little space to fill up. And it were companies which had the skill sets to exploit the conditions that grew well in spite of a generally flat year.

This trend is easily noticeable in the way companies grew during the fiscal 2001-02. Although Wipro retained the top spot as the largest network integrator, the fastest growth among the top 10 players came from Global Telesystems, Tulip IT Services, and HCL Comnet, each of which emerged as the top deployer in the niche areas of contact centers, wireless MANs, and VSATs, respectively.

Highlights 2001-02

VSAT service providers left a mark in the network integration space Lack of differentiation among NIs, who looked almost the same—pushing the same vendors, providing the same service Companies worked towards realizing better margins for the services offered

When it came to the ranking, the largest integrator in the market was Wipro, which was able to maintain some gap between it and the rest. Its total business stood at Rs 245 crore. HCL Comnet, Datacraft, HECL, HCL Infosystems, Network Solutions, and GTL, followed Wipro. While Wipro, Datacraft, HCL, and NetSol, have been the top integration providers without presence on the VSAT domain, HCL Comnet, HECL and Comsat Max, have substantial revenue coming from VSAT connectivity and services.

The good news for network integrators, during the last year, was the increase in projects with a good consultancy and services component. The integrator to accrue the top revenue as a result of consultancy and integration services is HCL Comnet. While Wipro’s revenue from this portion stood at Rs 66.7 crore, HCL Comnet’s was Rs 67.94 crore. Datacraft’s revenue from consultancy and services was Rs 34 crore, NetSol’s Rs 22.8 crore, GTL’s 29.62 crore, and Comsat Max’s Rs 30 crore.

Focus on Consultancy, Services
The industry saw a strong shift towards outsourcing and services. Storage and security were becoming inevitable. Expected arrival of VoIP and wireless LAN, continuation of WAN implementations, and centralized computing, really set the ball rolling. Here too, what separated the winners from the rest was the ability to clearly rebuild and refocus. For example, Wipro’s strategy was to be a partner of preference to all its principals and move to the Asian region; NetSol added people and software skill sets to consolidate itself post the acquisition of its consultancy and design division by Intel. Datacraft concentrated on its ‘Millennium Strategy’ while Ramco focused on end-to-end solutions.

As a result of such focus, network integrators actually feel they did better than the expectations. The heartening trend has been that the margins have gone up. This was mainly because the network integration market has finally arrived to the point where consultancy, design, and implementation services revenue came in significantly. There were several projects that involved just consultancy and implementation services, while the products were coming from different suppliers. This year, about 30 percent of the revenue came from the consultancy and integration services.

Things to Watch out for

Companies like Wipro and HCL Comnet have already set up the processes for doing international NI projects. The rewards may be forthcoming this year. If software companies and ITeS have hit it big, there is no reason why Indian network engineers cannot carve out a niche for themselves A big gap needs to be filled in the telecommunication network design and integration space. As it stands today, companies like Siemens, Motorola and Ericsson are awarded these works in turnkey contracts. Though some of these work are getting subcontracted to the NIs, a primary contract is always more valuable in terms of both reputation as well as revenues

Verticals
The banking and finance sector was the most promising for all players. This segment alone accounted for above 25 percent of the total revenue. IT and telecom sectors, which were the top sectors in the past few years on deployment, remained sluggish. This year, for the top integrators, revenue from these segments accounted for less than 40 percent of their total revenue. Also, the call center market opened up new opportunities. Most of the vendors rushed to harness this new gold mine.