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!