Telecom Industry: Varied needs for diverse geographies

Wednesday, 19 August 2009

Growth in the telecom industry is following different patterns in developed and developing nations. Telecom operators in the developed countries like US, UK, majority of Europe and Japan are looking towards high end value added services (VAS), whereas it is still a matter of reaching out to the masses for countries in South East Asia, Latin America and Middle East and Africa (MEA). Over the years, global telecom giants such as AT&T, Vodafone, Verizon, etc. have diversified and have established centers across the globe. Telecom operators are moving from high end VAS services and higher tariff rate regions to destinations where majority of the population is in the lower middle class to lower class strata. Different regions warrant different approaches to the market. Moreover, with the global economic slowdown impacting the revenue growth, telecom operators are looking at innovative strategies to manage costs effectively in line with their growth plans. Considering the developed countries where telecom operators are looking at high-end VAS like Mobile TV, IPTV, broadband connections etc., a complete focused approach is required. These services are expensive and cannot fit every subscriber’s budget. Therefore in order to understand the prospects, telecom operators are looking towards outsourcing service providers to study various markets. Operators are trying to understand the behavior patterns, likes, dislikes and preferences of their subscribers before offering high-end VAS. On the other hand, countries like India, Pakistan, Sri Lanka and Africa (except South Africa) the connectivity has not yet spread across all cities/villages. There are still cities that lack basic means of communication like fixed line services or network towers. In India, teledensity was at 39.86% for the year ended 2008 as compared to US with a teledensity of 82% for the same period. India’s teledensity in the rural area is 16.54% with 72.2% of the India’s 1.1 billion population living in rural areas. This translates into opportunity for global as well as local telecom players to expand their presence, not only using conventional methods, but also by looking at innovative service offerings. For e.g. in the rural areas of Philippines, Kenya, Tanzania etc, where there is a lack of bank facility, mobile phones are used heavily to transfer of funds. Such innovation in different geographies based on country-specific requirement will require local understanding of the market. Outsourcing Perspective Telecom industry has been relatively less impacted by the global economic slowdown primarily because of the dependence on communications. However, fall in relative profitability has led telecom operators to explore options to cut costs. Some rapid growth areas for outsourcing in the telecom vertical are: •    Customer service: With the subscribers in the emerging markets set to grow at around 20% to 25% in the next one year, there will be an increasing need to manage the growing subscriber base. Also with the telecom players entering diverse markets, there will be increased demands for multi-lingual capabilities to address the subscriber’s requirement. For e.g., outsourcing service providers in Malaysia are leveraging on their multi-lingual capabilities and are offering customer support services to countries like China, Korea, Japan etc. •    Market research analytics: Newer high-end VAS like Mobile TV, IPTV, mobile advertising require an in-depth analysis and profiling of customer preferences and their behavior. This will mean requirement of tools, technology and resources to cross-tab subscriber data. Currently, there are outsourcing service providers like Fractal Analytics, Marketics, and FirstSource, etc. who are offering these services. With the growth of the subscribers there will be a rise in demand for outsourcing/offshoring of market research related services. •    Purchases in the telecom companies in the past have been decentralized and companies are now looking to manage these services more effectively considering the global slowdown. This will lead to growth in outsourcing/offshoring of billing and spend management services to a specialized service provider. For instance, a five year deal was signed between Infosys BPO and T-mobile recently, where Infosys BPO will manage services ranging from customer finance, commercial finance to F&A related services and procurement operations. Further, recent trends in the contracts between telecom operators and outsourcing service providers has seen telecom operators looking at service providers who can offer ‘end-to-end’ services. One of the primary reasons for this is that the telecom operators are centralizing the services offshored to limited (one maybe two) service providers. This makes it imperative for the service providers to build substantial capabilities in order to attract larger contracts from global telecom service providers.

 

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