T&M Industry in India : Review as the year winds down!

As we enter the years last week,it is worthwhile to review how the year is going to be for various big T&M companies.Although different companies have different fiscal years ranging from October to March,we can get some idea how the industry overall is tending.Particularly the trend post 2008 is very significant as the industry overall went down.Also the year 2011-12 was tough due to turmoil in the Communications Services industry (service providers in particular) and resultant pushbacks on purchases.Off course,there look to be some sort of greenshoots,as the policy related terms are better.

Let us be optimistic for the next year ahead. We find the leader of the industry looked to have had a tepid last year,and around  60 M $ clocking of revenue. There is some growth in the business of the second ranked player,but increment of 2 to 3 percent is hardly big.Let us find how others (in 20M range) companies are doing? Their performances are also not enthralling!

So,overall we find the industry is still in the throes of recession of 2008 times.It is still to get on traction of new chapter of growth and in the meantime there are significant M&As in the industry which are putting its own impact on respective India operations.Likewise the Defense related procurements have not met with complete closures.These deals may impact Jan-March 13 quarter and so the figures for FY13 may be significantly different than the trend so far.

Therefore we need to go a little deeper in the T&M industry.Some major indigeneous deals are also
going to close shortly. Let us watch closely that too.This will be our last post of 2012 and let us move into new year and smoothly and positivism should help ahead. Merry  Christmas and happy new year! 

T&M In India : Midway things look even keel in FY13

This fiscal had been going very well for the industry so far.Although there are no closures of major deals pertaining to LTE,or LTE Adv because of so much uncertainity around the sector,there have been small businesses in Telecom non-core area. The DGS&D business remained dominated by Tek and now some inroads being made by R&S too. This segment continued to attract the smaller indigeneous companies.Some local solutions created by a few companies are standardised by the Education sectors and that scaled this year too.

The most important business off course came from the Defense Sector.Buoyed by big Defence Budget overall (200,000 cr approx) this continued to be bullish.Here again lot of portable deals were coming from the regional field units and the Supply units.Many new products got approval and certification from the Quality organisations of Navy and army as well.

I think next three months will see the closure activity really picking the pace.Scientists in the Defense Labs are also raising the indents and taking the procurement action.This activity will lead to fair amount of supplies to various DRDO and field labs.Naturally the instruments reaching the labs will further project completion and in turn progress this.

In the major program of Telecomm R&D activity with the incumbent operator,the lab for approvals and security compliance has not been completed.Not sure if the major portion of Rs 60 cr will be spent this fiscal,eventhough lot of pre procurement activity is on.Let us hope at least few procurements of NOFN instruments will happen in FY13. Business results from Top three T&M vendors for FY13 so far has been soft and lower YOY. This is not encouraging,but I think the smaller niche players will put up better results.We keep our hopes on.Keep watching this space.

T&M Industry in India: Sentiments Perking up !

There seems to be a little bit of sentiment change for the better,as the so called policy paralysis on the part of the Government has ebbed. Two to three announcements by the Govt did improve the expectations and even ever sceptical critics of the Govt are having a second thought on total write-off  on the growth front. There is change in the climate (literally) as weather turns cooler in the Capital ,and welcoming!

Even in the absence of large scale T&M purchases by the big operators,there is clear search for new customers in the economy. There is a lot of recruitment noise for IT integration activity and public sector utilities like Railways. At least there is activity and overtime these should convert to closures of deals. Some deals have been closed at the DGS&D as well.

At Macro level November does give indication of different consolidations at the private equity levels too.As the calender year races towards close,the mood of winding up happens at the Foreign western shores. But so far there is no indication that Europe is out of travel and besides the US ,no other region seems prepared to offset western slide.Asiapac will not definitely be silent though.India should therefore be logical beneficiary of this partly.US policies look to continue to support creating jobs at home!

T&M Industry in India : Is there a created Pessimism?

We are seeing a fair amount of percieved pessimism and despondency in Business and Political Press writings! This is definitely true on the external sectors of the Economy.The reasons are very obvious.The western disturbance due to delays in opening retail,insurance and other vital sectors to FDI and struggling Capital Markets can be very well understood. Even our Economist PM has got a new tag of "Underachiever" by the General Media Moghul.

In India hoever if we look inwards, things are really "Business as usual" . The Economy is moving at a rate of 6-5% or so . Consumers are buying what they used to.People are still cursing the politicians and yet queing up for the Friday releases and brands are doing reasonably ok, if not as heady as in 2007 pre-Lehman Brothers! The UNO report still says India is the third most sought after investment destination. So where is the disconnect between "our right to grow at 9%' and the Ground Reality?

My view is very simple here as the T&M business person. The T&M industry growth is largely driven by the growth in industries it tends to serve.We saw a one-way steep growth in the late 90s (during Narasimha Rao Govt) ,and 2002-08 when we had NDA
and UPA1  at the helm. Personally I think  our industry grows when Defense,Telecom and the Government Sectors tend to spend the alloted money,irrespective of which party really is at the Center.The underlying thing is combination of our preparedness and Contracting Parties spending.Inspite of deregulation and privatisation, it is the linkages to PSU, the Govt and the DGS&D who finally give ACTUAL businesses to the T&M vendors.

And this group is not going to be affected by the GDP number being this or that much.As the macro figures of Budgets to all major depts of the Govt, and the PSUs under them is rising steepily.Yes there is a little pause, but I think the slowdown to our business is overplayed as the media overanxious. I think India has enough resilience at work to ride over this time,while keeping Super Cycle in mind.     

T&M Industry in India: Can a new initiative come from indigeneous Tablet?

One of the ideas which I have shared in my earlier blogs is to develop "just sufficient" hardware products out of the indigeneous T&M industry.We have in India many Electronics hardware companies (even a few listed companies) which are product driven catering to mass markets of Education and Railways & Process Control.These companies have done well in yesteryears and made mark in sales & production.Now they see effects of business getting globalised and due to Components, supply side economics and duty structure  etc are not so competitive.Availability of smart designers who have analog domain expertise and understanding of embedded system together seems to be a rare skillset. Result is the indigeneous hardware industry is practically non-existent!

I believe this very situation can be turned around if we think more broadly and create a combination of hardware and apps meant for Test & Measurement riding over the popular hardware platforms.Today web 2 and higher technologies and Tablet are penetrating the consumer wide market.Education sector is being highly supported by the Government and there lies the big opportunity to create "Instrument Panel" and develop virtual instrumentation largely indigeneously. Again the popular instruments,portables and used in large numbers can be thought off. Even though off the shelf products like a $129 Spectrum Analyser is available commercially, what Indian industry can do is more software,more apps and keeping an inexpensive tablet as the basic platform.By doing this we will achieve scale and volume (keeping hardware standard across group of instruments) and value intact (developing apps,services and software locally through local manpower) !

We will then be selling products to our customers which we dont have to buy! Isnt it a solid arbitrage which Indian IT industry is famous for ?  

T&M Industry in India: FY13 is not the end,it is merely a bend!

FY13 has really started with big challenges at hand. The macro-economic factors are not very encouraging,and fiscal and current account defecit are showing worse and worser trends with Currency showing continuous slide.What is causing big worry is that most of the T&M vendors who generally sell at least 50% stuff in foreign currency expect customers budget getting skewed unfavorably.As it is the Capex is being pushed back by the Finance mandarins at both manufacturing and Services industry.The justification of higher Capex (non-convertible to Opex) is just not tenable as the Expenses on interests cost as well as Higher Cost Dollar and Euro.What does all this mean to T&M sellers,in terms of Market Segments  and type of deals to be focussed?

T&M companies can convert this time of anxiety to opportunity by merely adjusting their course slightly.The major segments of traditional T&M are the Defence /Aerospace and Communications.Within these the emphasis should be selling at the back end-focussing on Global and Indian major Contractors as a part of Deployment contract,or the Offsetting Contract.The advantage will be that locking of T&M supplier will happen at the main contract itself and FE impact will be evened out.It is win-win situation to both the Customer and the T&M Supplier.Likewise the NEM supplier can be front-ending a package which may include T&M services( Acceptance,installation,commissioning,conformance/performance testing etc0 as a part of total solution) to neutralise the exchange impact!

Further, the fragmented sectors over the Geography needs to be focussed for locating newer clients in education, Homeland Security and State Industrial Parks etc.India continuously attracts Design Centre and Contract Engineering work from abroad.The last count suggests that as many as 800 plus companies have set up some sort of Design Contracting in Bangalore City itself .This will provide fodder to find next Intel or a John Welch Tech Center for selling T&M Capital Equipment.

All in all, it is tougher bit now but with a little perseverance and a bit more of diversification on Client side we can iron out the lean time now.I expect this to last for couple of Quarters before we see growth again logging Double Digit track.All the best
folks.  

T&M Industry in India : FY13 Telecom trigger to T&M Services Breakout?

As I write this blog, Rupee has slipped to 56.50 against the Greenback.The deficit on both fiscal and current account keeps widening and the GDP for the current quarter not inspiring at all. Topping all this is the current Telecom Scenario where uncertainities loom large and the prospects of any relief news to operators look distant!

The question naturally confronting our industry is what will happen to the operators plans to buy the Capital Equipment and derivatively the T&M instruments,the Systems and Services to deploy all those fancy infrastructure equipment like LTE,LTE Advance,the EVDO and the OSS/BSS (now also called the SPIT by some ).? Whenever any capex is planned by the operator company,there is always questioning and the RoI etc is sought to be justified.Will the Capex on T&M equipment go up or go down if we compare the scenario today compared to pre 2G times? The answer is may be ,may be not!

However if we just go a little deeper and analyse the scenario from the Business Point of View,we find that the situation of high Spectrum Prices has happened not due to Government Policy creation.A high Spectrum Price percieved by the market is also creation of the players too, as they had paid very large (my assesment ) price for 3G.This perhaps had led to Government tasting the blood, seeing aggressive auction terms as a tool to get "below the line" revenues for its balnce sheet ,to tackle the deficit. Off Course the cascading effect of all this will ultimately show up in increased Capex.

As the operators face this heat of increased expenditure and resultant cost push,and margin shrinking,there will be internal pressure to find ways and means to find methods to reduce Capex, and/or convert to Opex as much as possible.So, in short term at least we will see T&M buys also being pushed back by the bean counters at the Service Providers.But as the time goes, with licences waiting for renewal and network infrastructures on higher frequency platforms  Capex will increase (and definitely T&M services many many times ) without doubt !

Smart T&M companies can gear themselves up with right infrastructure to deliver all kind of Deployment Services,Asset Management Services, Lease/Rental, Logistics and Supply Chain services,Network optimisation, Synchronisation, Interface Test and Technology services etc etc. This means the WORKS for T&M Services!!

T&M Industry in India: Is it homeland security,Big Data &Cloud!

Here we come again and discuss how the T&M industry can participate in and influence the hurly worly world of Home Land Security, of  Big Data (including Meta Data) and virtualisation through Cloud? Many thoughts are crossing the mind as these new interest technologies are splashing in India too and many Indian Business Group are eyeing the big opportunities here.Selling,Supporting and integration everything will be involved and it is the T&M businesses which has to make smart moves by plugging itself in these.It is worthwhile to take one by one.

Quoting from an Industry association report,Local Homeland Security market is expected to grow from present $8 Billion to $16 Billion in next three years.Market pie is big and the oomph part is none of the T&M companies Globally are involved in specing the RFPs from the customers.What is even more interesting is the fact their local subsidiaries have not formed alliances.So clearly is the case of vacant space to position testing and management solutions around T&M type Equipment.

Everybodys Grandmother knows the proliferation of Storage based "Data Centers" geostrategically located throughout the World and the need to test and manage the VLAN created between large farms.For the demanding users of today we need to ensure that we are continuously up 24 hours a day.Amazon like approach is getting popular with lot of virtualisation of server spaces.Pinterest type of new web techs are also big guzlers of this data.Lot of Cloud companies are starting up in India,and companies like Swifttest are offering SAN,VLAN testing solutions and Networking testing services too.How to ensure safety,security and conformity to law is the automatic testing opportunity here.

We will discuss more on these individual segments opportunities in successive blogs.But one thing is clear,these opportunities exist at an intersection of Big Data and Virtualisation (saving Capex is necessary need behind the need!) and Security (both Electronic and Overall Homeland).Local standards are still to be formulated and again T&M can play its role there too.

T&M Industry in India:Domestic understanding of Global Tech?

Last two weeks or so have been really watershed times for the Global Tech industry and in India also we had had debilitating effects on our economy ,particularly related to external sector.The rupee has slided to all time low and right now there seems to be the race to bottom.Steepest Petrol price hike and almost record defeicit on union fiscal front as well as Balance of Payment side.This is even more disappointing as we see no favorable clue either from Global Financial System or from Policy Makers at home!

Globally the tech business is turning out new successes on the public money.Facebook consolidated position by first day success of IPO to a $100 B mcap company,although many people questioning its Business Model sustainability,as the DotCom bust haunts the Silicon Valley.There is high speculation on the viability of a typical "eye ball to ad revenue" model which could lead to a possible 1 Trillion $ company, or nightmare to the valley mandarins and investors.

The past weeks also saw Google transitioning from pure play Search Companies to Product Innovation company after acquisition of Motorola Mobility and this is really we have pieces of Learning! How come a successful company like Google is not "sticking to the knitting" and venturing into reviving a failed business of ex Motorola branded phones-sinking lot of Good Money into developing hardware.......

We need to understand dilemma of tech innovators,the pure hardware companies here.Every company goes through a cycle of Product-Service-Productised service-New Product cycle.So if you are a hardware company,you have to and you must diversify into service elements related to that hardware to retain customers and remain viable.Once we have milched the services triggered margins enough,new growth can happen by only Products-new Products!

I think T&M industry in India has to understand clearly that we cannot continue to sell Instruments in the Domestic Market through Global Brand Power alone,and retain big margins and share.We need to have service envelope to get close to our customers and once reached a saturation level-reinvent with block buster New Products.Creating series of new Growth Engines is key to Long Term survivability!   

T&M Industry in India: Can Calibration Services leverage the present hard times?

Currently T&M hardware sales,like any other hardware is suffering the tough environment as the headwinds of declining Rupee,Increasing fiscal defecit,mounting balance of payment due to Commodities like Crude and Gold, are on the horizon.What can be done to survive the times? May be the Services segment can give us a clue as the fresh sales stagnate for most of the companies and installed base can help boost services-most importantly Calibration-revenues.

The basic premises on Calibration services are squarely dependent on couple of factors.There is very high cumulative complex instruments installed base in major sectors: Defense,Telecomm,Education and Research and there is very little calibration activity outside OEM /subsidiary.Also major Customers have traditionally preferred to do it inhou.se . This tendency is mainly due to "Sarkari" approach. Newer OEMs are trying to enter the country and either they dont have local cal centers,or they leverage Asia Pacific regions of their companies. This is where a smart T&M services company can get in and tie it with these OEMs as the third party service provider of T&M services.

If we try to guestimate the potential market size in India,we can do this by looking at Global numbers.Estimated market size should be approx 30 B $ and 2% of this market can be fresh sales per year.This sale is not growing,or slightly declining.But the Global Calibration services revenues are approx 2B$ and if we take 1% of that for India,it is growing,even though a comparatively smaller scale. So I think there is a case for selling these T&M services with lot of Management emphasis here.The beauty is that it is high margin services business and very versatile in nature and vendor neutral but focussed on customers.  

T&M Industry in India: Can we impact the Business Confidence?

The way Business Confidence is sliding nowadays,and there is general disappointment with the lack of favorable climate,the T&M industry is also getting affected accordingly.Whenever such macro parameters are tough and the business trend is not a friend, we need to take a hard look.Since Customers well being is necessary for our own survival and growth, we have to devise solutions to improve our customers Business Performance in a fundamental way.

One of the areas in which T&M industry can help do this through Service Provider related test & management solutions for improving their QoS,saving on the Capex and making their networks more inviting for the new customers,marginal customers and customers which can become loyal due to better Customer Experience.Going by the TRAI data on Service Operators Performance, such needs very much exist and T&M vendors have big opportunity to help there! If they are making these problems fixed through better network utilisation and IT Management,it will be mutually helpful to the T&M Services vendor as well.

It is very challenging work to help prospective customers in generally tough times,but then T&M Services vendor have to be different than just plain vanilla hardware suppliers.T&M vendors have to display their better application knowledge,architect appropriate test solutions,check the Prototype for beta testing and deploy for customer usage.Often times such solutions might involve Risk Sharing,or financing.This means both technological,commercial and risk sharing management with these customers.Sharing solutions risk and also the Business Risk can be sometimes over-reaching, but this is where these vendors have to show Partnership approach!

T&M Industry in India :Can new marketing campaign help?

The growth of the industry in a particular domain depends upon the way we tend to develop market and new customers and reach out through different media and outlets.A combination of physical and virtual ,helps in reaching different markets particularly new market segments.One of the way is to exploit the different software layers by which a T&M company might be trying to reach clients.These "layers" can be points of interaction/interfaces with the customers which help customers to buy more customised products,more products and more easily and conveniently from the T&M companies.Result of all this can be bigger pie for the T&M Business.

Non Physical interfaces and interaction points are mainly driven by the internet media,contribution to online communities,linkage to third party websites and cross referrals by the opinion leaders and developing web ecosystems for the T&M purchases etc.The earliest example of non-physical interaction was the tele-sales channel introduced in late 90s and the most recent could be linkages of Order Management Systems and supply chain elements virtually.In India this sort of approach is tried in a limited way couple of Top Global MNCs.Basically there is some technology element by which our potential or existing customers use in interacting with the T&M company.

T&M companies can achieve this more easily in India,as by nature this business is mature in the sense of appreciating technology,and the people are built abinitio to use IT in creating and nurturing the business.If sales force automation can be made more valued with newer web technologies,web programming interfaces,blogs and online communities and application development sharing,the overall cost of selling per unit of currency will reduce and revenues will markedly improve.It is ironical that most technology savy business of T&M ,is less than exploiting this power for its own development!  

T&M Industry in India:Can manufacturing be the key?

In my blog of March 2, we had discussed the various "M" factors which may affect the T&M industry in India very positively.One of the factor was Manufacturing! Manufacturing-call it Strategic, EMS,ODM driven by making India more competitive,or moved by local job creations,or creating the offset as in India Government policy -it can lead to fillip in both sales of T&M as well as the automation of test systems. Now the local manufacturing requires more than a directive policy and procurement process-it requires whole new ecosystem and injection of Technology,Capital through FDI and People Development in this function.

There are at least 10 new projects under Central Government,where the procurement of large scale electronics hardware-components,subassemblies and systems will take place.The local industry can be motivated to sieze this opportunity to supply majorly thru this manufacturing.T&M can be a derivative gainer in the sense of supplying testers and systems and services to help there.Domestic demand of such hardwares is expected to be 400B$ by 2020,and progressive local value addition will be key here!

The demand drivers of these large scale projects and procurements are the Strategic Defense Projects,the Governance Projects of the various states,and the centre,NEM telecom infrastructure and Consumer/Digital Life Style products.Lifestyle products will be driven by home-security as well as the Automotive Electronics and money dispensing machines on new mCommerce  platforms!Facilitating market access in these projects will be central policy of the Government.

I estimate the marginal T&M testers will be to the tune of Rs 800 Crore,as easily the projects are almost 40,000 Cr Rupees worth and 2% of that fihure should be easily earmarked for T&M.Off-Course T&M amount will be shared by majority imported T&M eventhough the main equipment for these projects can be majority indigeneous,given the incentivising/access policy.Is Indian Electronics industry in general listening to this opportunity,and more meaningfully the T&M vendors preparing with their manufacturing test solutions?

T&M Industry in India : FY13 drivers and beyond !

As we discussed in the last blog, Indian Economy crrently is sort of struggling and needs a little bit of boosting through policy initiatives and other measures.Since perception is reality,it is the image and brand of India which needs refurbishing.Our major tech sectors can be very effectively deployed to do this,if  international investors feel secured putting money here!

T&M industry serves mainly the technology sectors.If these sectors themselves dont grow the derivative T&M industry tends to struggle more.The T&M industry can be very effective in helping make the user industry create solutions and grow their span offer.This will in turn support the growth of T&M market as well.Looks a little "missionary" in words,but T&M industrys role has always been critical-helping users design and produce their products better.

Another way we in India can create bigger T&M pie. And that is creative consolidation of smaller T&M companies in niche areas and geographies to merge.That is a little more involved work today,as all these companies are slogging to somehow survive the overall setback in Defense,Telecom and other major businesses.Here we need to see geographic profile of box T&M players and encourage them to consolidate for better scale.Likewise we need to consolidate T&M companies in the Power,Educationand Railways sectors.The interesting thing is the T&M companies see the opportunities in these businesses but dont have strength financially,or market support wise.Sector consolidation will help immensely.Some of them will get a rerating in the stock market where they are listed few years back and languishing now!

I definitely think the industry has to write their new course off the inflexion point.It cant just depend upon a residual market of portables.That area is highly commoditised and cant support so many Global and scattered Indian Companies.T&M always works on the 1X10 principle (Instruments should be 10 times more precise than the target). I am sure we will rise to the occasion as the opportunity is now! 

T&M in India: FY 13 drivers point to Growth of sustaining nature!

T&M industry in India is poised to grow very well if it is able to seize large projects opportunities in the telecom and defense sectors.In both these sectors sizable deals up to 200M$ will get finalised in FY13.The important thing to factor
is which of the major companies have been working on solutions architecting and application profiling of tests.All the projects have lot of systemic value and the
technology solution capability,and ability to articulate them to tech user will be
important.Locally created solutions will obviously be preferred although the core
testers may be procured from international sources.

Many big telecom operators are looking towards the NEM vendors from international
sources for their TCO,RoI,CEM and QoS and SLA related commitments to their clients
or their CFOs.That is where the smart T&M companies can act and provide a value-add link to their customers.We will discuss how some of the techno-economic impacts can
be made by the test companies.Watch this space!

T&M Industry in India: Acquisition and Consolidation,FDI

In this blog concerning the growth through Consolidation of T&M industry in India,we will talk of couple of T&M Services companies which need to be looked at,from the point of view of strengthening the financials and improving the service offering of these.First to come in mind are good number of small operators who give out on rent the T&M instruments widely used in maintenance of physical layers of the telecom.Instruments in use are the Sitemaster and OTDR and the RF monitors of different kind.There is no recognised MNC brand operating in the country,except Livingston.Some others like Electrorent,TestEquity etc tried entering the market but failed.A few Indian mercantile companies are in this business ,mainly Mumbai and Kolkata based traders.So the first level of T&M Consolidation can be done by a Global Lease Rental and Asset Management and Reconstruction company to achieve at least a revenue of say 26-28 Cr pureplay services in this segment.Because of the depressed market conditions,there is a case of wise cherry picking here.

Another recommendation will be in the area of such companies in the Power sector maintenance.Again there has been severe depression with mainstream power companies and they are wanting to shed or hiveoff the testing and maintenance business to separate specialist organisations.Entrepreneurs can explore such opportunities at BGR,JSPL and some smart power operators companies.Here the consolidation of T&M companies can lead to creation of a platform which can lead to real big operations.They will have scope of big expansion when UMPP,Nuclear and Coal based power projects are put into stream.

The aerospace and Defense related maintenance companies can be consolidated in a more innovative way.There are good large assets are available of many MROs of aviation (Commercial Aviation)in several cities where there is MROs headquarters.So these can be consolidated to achieve better profiability and scaling too.


We will keep this piece of Acquisition and consolidation going in couple of more blog posts.Keep watching!

T&M Industry in India: Acquisition,Consolidation,FDI and other tidbits!

T&M industry in India has been very interesting phases over the last 40 years or so.It has been having various steps of Concept Development,Channel Acquisition and Distribution metamorphosis and channel disruptions etc.Mainly there has not been much of the indigeneous industry right since the 70s.Only a clutch of the local industries has been at the helm of affairs, names flashing then were Aplab and Motwane et al.So, the onus had been on the MNCs to develop local market.And the task,risk and cost of having direct presence being very high,the idea had been to develop the local associates (from an Agent,Sales Rep,to Distributor)to be a virtual Principal company.

A combination of renowned Principal, and very professional distributor was real lethal those days.Basically the two T&M companies ruled 80percent of organised selling and supporting the India Business.In the late 80s the situation started changing as India had by then a little liberalised and exposed to many modern projects in Aerospace,Defense and Telecom sectors of the Country.More Western and Japanese companies in T&M space started courting Indian market then.New alliances,new business models and local talent hunt dovetailed US returned Professionals.After 1991 the scene was fairly stable in terms of reforms and India started liberalisation approach unidirectionally!

FY2K and post 9/11 the tech world was so much changed and love affair between the Bangalore and the valley reaching crescendo, practically everybody wanted an India backoffice presence.New companies started registering and all T&M companies operating through local subsidiaries and each was pinching the channel created by the other.Most companies were headed by people from HP/Agilent & Acterna/JDSU. Today when we talk of T&M talent acquisition,we seem pretty full and the way companies now can move on is Consolidation, Consolidation and Consolidation.

In next few blogs we will discuss possible realignments,acquisitions and how to do it more inexpensively.And more cash-accretively, as the finance types say!

T&M Acquisitions in India can be motivated by Offset Policies!

Since 2006 the central cabinet had given a kind of green light to various user ministries to pursue the so called "Offset Policy" in major procurements the user departments are making.The current proposal stands at the !00 M$ or 200 M$ thresholds for these offsets to get triggered.This actually leads to offsetting of 30% of procurements through local companies,or locally created companies by MNCs for offsetting the total contract outgo.In bigger cases the threshold can be as much as 50% contract value.

To coordinate in a systematic manner across different user ministries/sectors a National Offset Authority is chaired at Cabinet Secretary Level.Today mainly the Defence Ministry are seizing the opportunity because of large scale/Big ticket projects procurement.Total offset pie available to cater to Defense itself is estimated to be worth around Rs 20000Cr!

This is where opportunity,a creative one can come for T&M companies.As the local procurement will consist of 3rdparty hardware,3rd party software,services and program management,independent Engineering Services and lot of jigs,fixtures,tools and testers,the whole gamut can be managed by T&M Services banner easily.This will require astute sales and business planning,local companies creation and motivating small,niche hitech companies to come to India and get plugged in with this huge,sustainable and game changing one for T&M industry!

Designing a business model for different high technology sectors will be very involved process.Depending upon resources of information,taxonomy,databases,bills of materials and global/local pricing on products and services these models will have to be tweaked.Many of the processes of procurement are getting eDriven and therefore they can be very cost efficient and suitable for Governance Platform too.T&M industry more particularly T&M services will benefit.M&A of various main technology companies and therefore attendant T&M companies will benefit by this opportunity.We need to see how it plays out and how we respond in an enterprising manner!

T&M Industry in India:FY13 Drivers for the Customers

The FY 13 has started with some mixed feelings and hangup of policy paralysis and balance sheet constraints for the Government.The overhang of policy retrospective for tax calculation on Capital Gains is there,with deficit on balance of payment widening.Rupee is flirting around 51 to a Dollar.T&M demands naturally is not auguring well because all the major purchases need to be imported.In such a scenario the different sectors using T&M are stacked up as follows:

Defense: The controversy and major scandals reported in the press recently will have its contingent effect on T&M purchases in the three wings of services.SMT/STE products and tools in EME TG trials will be slightly delayed but tendered purchases will happen as in the pipeline.Likewise the field purchases through tenders of DGS&D will happen as planned.

Telecom: The major driver in the operator sement will be the LTE.The TDD version is automatically decided per the band alloted and the choice for adopting International standards.Many vendors have done the PoC with major operators and initial orders for LTE infrastructure are trickling in.So the deployment T&M either directly,or through lease rental will happen.Even though fizz may not be there! Likewise major fiberisation project will go through.

Research & Development/Education sector: This will show a big boost with some major T&M purchases planned and under discussion at DGS&D and local Demand Officers level.The good part is that the demand will be higher than last year,more evenly distributed and geographically balanced.Perhaps North India overall will pip to the post when it comes at the year end.South and West will not be brighter this year!

So, Let us welcome the year fingers crossed.Hope is high but a couple of Government announcement positively could boost sentiments.

T&M can help in innovating Products!

Usually any industry involved with high technologies goes through the Product,Services and Product cycle.The cycle really represents the business attributes as the market matures from startup to mainstream and then fades off to get a replacement/substitute product.This cycle is also influenced by the disruptive technologies and inventions.In such times whole industry goes thru many changes in market place making Business Models turn on its heads.

One industry which keeps the innovation engine firing is the T&M products and services which helps churn out new products faster and accelerates time To Market TTM.T&M industry oftentimes defines new products and aids in design to form basis for "testability-design relationship".The Capex needed for designing these innovative products impacts these designs and vice-versa the testers cost etc gets raised per new design requirements.

India is experiencing this product innovation startup activity through various research organisations.Traditionally the CSIR and Defense R&D labs have contributed to these local IP creation.Now more than 800 MNCs are leveraging the local manpower infrastructure to design locally created products and services architechture.All these organisations are exploiting power of testing platforms in these diverse applications.The testers in these organisations have to test designs for "Conformance", Uniqueness of measurement,Accuracy and Quality.T&M here plays a crucial role in this regard.India hopes to create lot of local designs with new age T&M coming to its aid.

T&M: Test Challenges in Embedded Chips for Telecom Devices

This current decade is facing proliferation of faster Devices and multi functional implementation on chips.The various functions are being offered by the same Mobile Phones simultaneously.It is a camera,Radio,Social networking platform,Video streaming device besides the basic phone!This can all happen if the embedded chips are having complex architecture on the same Silicon.And before this can be realised it needs to be passing thru Testing/Verification. How and whether we have the right testing approach?

Testing of these complex ICs is done more and more through Software Defined Test or SDT.So the idea is to separate as much as we can the hardware ecosystem of T&M from its Software.Since we want to achieve more and more from the same chip,we hit the physical limits defined by Moores Law (number of transistor doubling every Eighteen Months)the only way out being build the testability at every stage of design and manufacturing!

Since T&M technology has to be smarter and faster than chips under design,the testing challenge is met by NOT resorting to physical devices increase but resorting to use of Multi Core Processors and Programmable Gate arrays,or FPGA.This allows us to use the same IP generated (during Design Stages) to leverage in Manufacturing Testing,concurrently.Separation of hardware and software defined test in T&M is great enabler to design compact multifunctional chips and cheaper Quality and Multifunctional devices: Smartphones,Tablets et al.We can dream of having a Smartphone in less than $50, for instance!

Software defined test ( SDT) is driving these designs of new age smart chips and devices made with them.T&M Services are as usual getting challenged by the user and in turn leveraging new architectures to produce and test them in turn! Interesting Osmosi effect at work!

T&M Impact in India: Mobility,Money,Medicare & Manufacturing!

T&M in India can impact and be impacted likewise by its M factor! The way the mobility is getting accelerated in our lives the T&M industry can get but impacted by them.Featurephones are being replaced by Smartphones and people are getting online even in rural India as well.The traditional services from the drab postal department-the Money Order has potential to be totally replaced by MMT or Mobile Money Transfer.Same goes true for other public services : the Medicare including Maternity related.

All this actually requires cheaper Smartphones, and newer innovative local apps and mass customisations.Local or localised standards and conformance/performance testing by the cheaper testers and field testing etc by even more inexpensive portables.Actually these designs of chips,hardwares have to come from India and these should be manufactured locally to really leverage the huge poential and latent demands.So another M factor Manufacturing comes into picture.Here repeatbility of measurement,productivity,quick test time and Money saving is important!

Where will all these inexpensive,portable,handheld,palmtop testers will get consumed.The Media industry will be one area where field testers should be absorbed in large numbers.My study on the demand elasticity,numbers of instruments and channels of distribution indicates that we CAN have a solid indigeneous powerhouse of an industry selling these testers in India.By way of illustration, a handheld portable Spectrum Analyser for Rs 5000 (up to L Band) and Rs 10000 (upto S band) at an annual demand of 50,000 qty is very feasible! We can extrapolate other instruments like Signal Generator, Power Meter and Signal Generators etc accordingly.

T&M Professionals and Entrepreneurs ! Do you see the opportunity here? If you feel No it is a pipe dream,please shoot a mail or phone in at +919810101238 T&M should be there in your entrepreneurial vision. Nano car or Chhotukool you remember!

T&M helping the new age Smartphone and "cell"

The onslaught of smaller femtocells and newer smartphones are putting design for testability and manufacturability challenges to T&M companies.No doubt the T&M OEMs are doing their best to show off achievement at Barcelona show as I write this blog.While Delhi streets were deserted due to strike protesting inflation and labour policy.In the Spanish town though there was quiet,I believe,and streets were at their usual charm.

The femtocell is just "cell" and Cisco is wanting to pile on this bandwagon and hype is created for LTE with NEMs claiming their wins in Europe and elsewhere.The T&M majors though are steadily advancing,few off course with tongue in cheek!

I remain quite confident that in 2012 we will find one vendor clearly outdistancing others on LTE testing.Particularly the TDD piece will come from behind and take the winners Crown.Revenuewise though among the Billionaire Club,we have new entry with NI creeping into the area of RF testing and Labview leading the charge.Voice over LTE and handoff testing will find new niches.Well optimism remains the winner!

T&M market in India is looking for Telecom breakthru!

T&M market has seen big comedown since mid2008,and the trough of 2009 still haunts it.The policy debacles on the telecom front have serially created further complications.Now it looks like there is some hope that the recovery on policy front should happen shortly.The NTP can be officially announced shortly where we should see some manufacturing related initiatives.On the rollout side the mother hen of the industry will be the Fiberisation project(with additional funding to Defense)and the LTE rollout.The LTE rollout should really trigger more downstream opportunities to new market adjacencies.

The LTE rollout will precede with certification,compliance and conformance test prospects to some vendors who have yet not come to India.Entrepreneurs will discover them across the Globe.Their expertise will be encashed by India version of LTE and the testing and upper layer tools and software will get sold for this market.We should see the applications right across the devices,networks and management systems.The system approvals will also require testing gears of Dollar heavy variety.I believe all this should add to the lifting of revenue toplines to T&M.

On portables,and the lower layers side the fiberisation project handled by the BSNL should give a fillip to this.ALL in all there is optimism in the air after quite a bit of despondency.

T&M market getting more promising for now onwards!

Recently the reports on Mexico telecom business revenues and associated mcap of those companies were disturbing.Because of the high tariff the economy there looks to be getting into incompetitive mode.Back home the telecom companies are complaining of high cost structures and declining growth of monthly subscribers.And the companies are clamouring for increasing the tariffs, up over already increased a few months back.Perhaps the license fees paid for 3G is showing up negatively on their balance sheet.

For one thing is clear though,the telecom industry is playing important role in impacting GDP and competitiveness of the Country.Generally the Power & Telecom sectors play a big role in an emerging economy.So all efforts must be put in to pep up these sectors by investing here,reducing the interest rate and making loans available liberally through the market as well as the banking system.This can be only done more efficiently if there are no losses and cost of transactions is less and operators make reasonable topline & bottomline growth.There are several ways it can be achieved.However one way -a small way- is to use the T&M industry in serving these sectors more!

T&M services can be deployed and instruments used to increase the efficiency,productivity and quality of the network operators and utility system and its impact will be quite high in terms of the output to input.Lot of economies of scale can be achieved by injecting innovation in the network management and deployment of T&M services.Using T&M and the T&M services innovatively can be a big efficiency booster.Few projects in Telecom and Power can be in Fiber based Networks and mega power projects.

Specific projects and how to make use of T&M in these will be discussed in following blogs this month.

T&M India market fortunes fluctuate with Telecom Market nature!

Since the beginning of 2001,the T&M market in India started behaving very differently than the previous thirty years or more.Whereas the T&M market earlier concentrated heavily on Defense,Aerospace and an occasional Pubcasting and DoT sectors, it decisively started growing with the deregulated Private sector Telecom.The Government and Public sector gave way to neo telecom companies in the private sector.By 2003 end the trend was getting into mainstream!

If we review the achievements overall in the past decade,few things are very evident.Telecom sector revenue logged up to approx 300KCr and the FDI was approx
10B$ plus and many private sector companies,or their associates became 100 KCr mcap.All major business groups piled on the bandwagon.The involvement of Private sector led to new devices companies like Micromax,Karbonn,Lava and extended to manufacturers like Gemini,HFCL etc.Many started cashing out by selling to overseas players.Market for T&M could get boost,particularly till2008 end.After struggle of past three years,and several anxieties later started looking up again.

Like wise the overall T&M market also went up and down with Telecom.New players like Education sector,industrial and defense R&D and power utilities chipped in with newer type of T&M businesses.Overall gain though was emergence of all together new private companies in all those sectors,where Government was dominant earlier.

What does future hold for market? Bright and even brighter as we move forward.Newer areas are slated to privatise,telecom technologies are getting more pervasives,FDI is expanding in new areas and GDP wants to explore new areas of growth to beat Global stagnation.T&M will get its due share and place of influencing.I am optimistic.

Also good day to write this blog.We celebrate our daughter Shikhas birthday today.As a bonus to boot we have Chinese new year,and also Netajis birthday.

T&M industry with mature outlook can provide clues for India Growth!

Whenever we confront a mature market,we feel people cant or wont buy our wares and some despondency will be there.But at those times a few things happen. Smart Companies make investment in innovation,keep good hold on their bright people and squeeze lot of bang from the buck,by focussing more on the "crevices and corners" of the balance sheet.Of course it requires a great risk taking abilities and foresight of People Power.

India is experiencing lot of despondency due to the Environment on the political economy and Governments lack of credibility on key issues,even though the overall banner policies are great.We have large number of people entering the job market and our fiscal deficit running high.We are not able to move on the good direction we had taken earlier.We have similar situation on the stagnating T&M industry.When there is stagnation here,we changed focus from T&M boxes to T&M Services and solutions for increasing the total pie the companies could address.Focus was on people: encouraging them to deliver better cash profit and finding more solutions created locally so the IP remains with us and we encash market ourselves.

Perhaps a similar approach can be tried at the Country level.Create industries for those very relevant to India.An example could be Power Regulation,and Household Power industry.Encourage them to find cheaper,innovative solutions which can be mass-marketed and the business can grow.Create more local applications in Healthcare,Education,mass entertainment,sprituality and anything which is mass marketable in India itself.There will be failures like Aakash(a hardware for Datawind) but there will be several others like Chhotukool and Portable ECG.Suppose we produce a BP and diabetes monitor at the cost of a small FM radio we will see the difference.Liewise we can leverage very smartly the products of such kind out of CSIR labs,DRDO labs for mass markets.

Fiscal Deficit can be tackled by removing exemptions on the Tax side,Divestment through the licensing auction for mining,water,port and similar natural resources and key profitable PSUs but not exceeding ten percent.Focus will shift from Licensing and control to Cooperative Sharing with Private Sector.Of course there are both Long term and short term measures are there,but the key point is innovation focus,priority to a few parameters which are essentil and ruthless execution aided by IT driven processes.

Both Businesses,Sports and the Government can learn from each other!

T&M market in 2012 to be driven by large national projects!

For 2012 and beyond,the T&M market in India is largely dependent on large commercial projects to be executed.Some of these are driven by BWA and the associated deployment of LTE_TD equipment,and testers to be associated with Fiberisation of BSNL network under USOF.Of course the buys,or renting of these testers will be undertaken by the total ecosystems of these projects.This involves the Operators,the NEMpartner,system integrator and other downstream companies.The T&M companies have to build right relationship,solution proposal and other marketing collaterals beforehand.

Likewise the Defense market should perk up as the procurement of last years microwave and RF equipment is not yet over and on top of this the big fiber projects undertaken by BSNL on their behalf will also be initiated.The Special test equipments SMTs and STEs will also be purchased in this year to the extent of 25 to 40Cr.

These above two project folders will cover over 50% of the total purchases in the organised bulk buys.

T&M Industry makes impact on Defense,Telecom and Internet plus Media markets!

Although the T&M industry serves other industries in improving their quality,productivity and profitability-like the Defense,Telecom and such like industries,the recent happenings are impacting these sectors due to web 2 plus technologies.Mostly the current impact has been due to data emphasis and the broadband (20 MHz rollout of BWA).Also the proliferation of many new devices getting attached to the network is affecting Communication Services.And because the testing and compliance of these networks influence services to different users,whole panaroma of sectors get influenced by T&M.

The devices which are appearing on the horizon are influenced by the Personal Technologies involved.The factors like Social Media,Mobility and Location Signalling are dictating the standards of testing.The different wireless standards in use are 4G and WLAN type with various conformities.And LTE 4G being more amenable to data usage is creating its influence on the users widely.Data Speed through LTE will make possible host of new devices attached to the network,and T&M services will have even bigger influence in future.Likewise the other wireless standard DLNA will be making difference to the Consumer and home networks.We will be free of tangled wires here!

The net technology or the IP based technology/business will meet the wireless at some point and blend to form either a common platform,or the compact interface of disparate worlds.The Key thing is to get advantage of T&M techniques into these user industries and make sure the users enjoy the super benefits.

As the T&M industry is meeting new challenges of testing and managing operating and business systems,the space is getting more exciting this running decade.Lot of fun is going to come our way and new businesses and startups will take off! Keep watching this space!