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Shashwat Chaturvedi
It was a balmy September day last year, when a cheery Mike Zafirovski took to stage in London. The Nortel CEO had been in charge of the company for around nine months, and he had some important announcements to share. Nortel, the multinational Canadian telecom equipment manufacturer was taking a stride into the future, donning a new robe. It would not focus on manufacturing alone; it would narrow its product portfolio and allocate more R&D to specific technology areas such as IMS, WiMAX, IPTV, etc. And above all, it would look at service in a way it never did before.
Months later, Nortel is putting that roadmap into practice. The company has created a separate division, labeled as Global Services and offers a host of services. Currently, the division accounts for some 20 per cent of the total revenue earned by the company. Globally, Asia plays a major role in this new setup, being one of the fastest growing markets for the company.
To add muscle to its team, Nortel has brought in Praveen Kumar as the vice president, Global Services (Asia). Kumar is an industry veteran, and was associated with IBM’s Services division prior to joining Nortel. A buoyant Kumar talks about how Nortel is not only talking big about services but also putting money where its mouth is.
“Services is, without an iota of doubt, a major focus area for us. As our CEO had said, we will no longer be a product company that offers services but a service company that offers products,” he says.
Quite big words from a company that till some years back was in the blues. Nortel’s history goes way back into the past, in fact into the early twentieth century. Suffice to say, by the nineties it was one of the biggest telecom companies in the globe. Since it was one of the few fiber optic manufacturers, it made merry during the Internet boom, laying miles and miles of costly cable and equipment and profiting handsomely.
According to estimates, when at its peak, Nortel accounted for more than a third of the total valuation of all the companies listed on the Toronto Stock Exchange.
And then, death knell sounded. The market collapsed and Nortel was the biggest calamity. Its capitalization fell from S398 billion (Canadian Dollars) in 2000 to less than $5 billion (Canadian Dollars) in 2002. Later on, frauds and scandals rocked the company.
Consequential developments lead to sacking of the management team and re-organization of the whole board.
That’s when, Zafirovski took charge.
The Phoenix arises
All that was last year, till Zafirovski announced the three-pronged strategy, focus on mobility and convergence, enterprise transformation, services and solutions. “Currently we offer close to 70 services to carriers and enterprises, right from systems integration, network deployment and management, application hosting, and others,” adds Kumar.
Speaking of Asia, as of now, Nortel currently has close to 100 odd customers for its services, “purely services” clarifies Kumar. The company is also shifting the Asian headquarters of the services division from Australia to Singapore. Little wonder, as China is one of the fastest growing market for the division and Singapore is more centrally located in geographic terms.
Alliance with Microsoft has been bolstering Nortel’s services and solutions. But it is the partners and channel that the company intends to utilize for the big push. “Our partners will play a major role in the whole services push. We refer to them as service delivery partners and intend to engage them in a variety of ways,” adds Kumar.
Competitive or Collaborative
By offering services is not Nortel threatening the likes of IBM and the rest? Kumar shakes his head in the negative. “We know our strength lies in technology, thus we will offer the services through our partners itself, unless the client insists otherwise,” he adds. A case in point is Bharti Airtel. Some time back, IBM Services had won the Bharti Airtel’s 10-year infrastructure management contract. On the same hand, Nortel is serving Bharti’s customers by running an IVR service at its NOC in New Delhi. “We are in the process of centralizing our services, and the NOC in Delhi will be a major servicing and back-end hub. While Singapore will be the strategic hub for Asia,” says Kumar.
But then, what about customers that do not use Nortel’s equipment? Will the company push for the same, a case of toe in the door? Kumar cites the case of a major company in Hong Kong, “We are managing their services and the complete infrastructure is based on Cisco hardware. We are open to any kind of vendor and equipment environment. In fact we intend to closely collaborate with most of them. Take the case of Microsoft; the company is now offering support for Nortel systems in its Vista OS. So we are not looking at pushing or peddling our products to clients,” he clarifies.
Asian odyssey
Currently, Nortel is working in 22 countries in Asia, with China being the biggest and the fastest growing market (in fact it has three JVs running in China). “Other than that, we are focusing on Australia, Thailand, Indonesia, Philippines, Japan, India and others. We are investing heavily in labor and in skills in all these countries,” says Kumar.
What about India? “Well I am very gung-ho about India and am hoping that in the next few years it will be as important market as China. In the few months that we have been here, we have already signed by around eight customers for services solely. Shortly, we will make a few big splashes again with big-ticket announcements. Hang on,” he smiles.
Kumar is all raring to go and take charge at the Singapore office, waiting for the complex to be readied in the next few days. In the past few years, there have been many similar announcements made by MNCs; some have succeeded while some have failed. Will Nortel be able to make the leap of faith, is a story that will unfold in the coming months. As of now, the signs are ominous.
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