Recession is an opportunity

NEW DELHI, INDIA: Current uncertain times are putting extreme pressures on CIO's across verticals to make sure IT investments already made or planned are optimised to the hilt.

Making every dollar count, puts onus on CIO to go for prudent IT infrastructure restructuring and re- tuning it to help company save costs and ride over the tough times.



Allen Ma, President, BT Asia Pacific, feels, recession rather than a threat, should be seen as blessing in disguise by CIO's as it is forcing them to have a re-look at their existing IT infrastructure and how they can fine tune it to streamline processes, improve productivity and help their enterprises reduce costs.

"Lot of MNCs today are facing challenges in terms of cost cutting which is forcing these companies to go to basics and relook at the the call structure, the cost base etc and ask themselves where they can reduce the cost. This is a financial storm and enterprise are making it sure that as to why and how they are growing the business.

"We believe that based on what we have picked up from our customers in last two months is that we are even in a better position to help them grow," says Allen.

"I see this as an opportunity rather than doom. Of course there are lots of new challenges but it us about how to help customers go through the current challenges and become even more stronger when the storm is behind us," adds Allen.



Apart from how CIO's can tackle current economic downturn, Alen Ma in a detailed interaction with Idhries Ahmad of CIOL talks about logic behind BT recent layoff of 10, 000 employees and its bearing on BT's India operations. Alen also shares some numbers about total networked IT market globally and BT India's addressable market in the country.

The BT Asia Pac president also briefs about the new geographies and verticals that the recent Frontline acquisition has accrued to BT stable.

CIOL: British Telecom had recently announced that it would cut 10,000 jobs by March 2009, following an 11 per cent dip in its profit after tax for the first half of the current financial year. Is it prudent to attribute the job cut to the current downturn we are witnessing in various geographies?.



Allen Ma. No. Nothing like that. You have to understand the context as to where those numbers are coming from. From a global workforce of 160,000 , BT for various reasons wants to reduce total number of people working with and for BT from 160000 to 150000.

Four thousand of those 10,000 are employees who are directly recruited by BT and remaining are on the job rolls of contractors, consultants and agency staff who work with BT on special contracts which could be two months, six months or a year. For these agencies, BT is one of many customers they are serving and they could shift their employees to any other customers.

Now, BT globally every year sees a natural attrition of close to seven thousand employees. What our CEO has decided that we are going to fill only three thousand of those seven thousand people which gives us reduction of four thousand. So if you put these numbers in context it means BT isn't laying off employees from company rolls, we are just not hiring for these vacancies.

CIOL: Many companies in India are also look at downsizing their work force, does BT India also have on anvil some job cuts for India.



AM: This is not even in my mind. India is a high growth country and customers here need ICT solutions to help them grow. We as company see lot of opportunity in the country

CIOL: Coming to global recession, how do you see it impacting BT globals business and how do you see the it affecting BT's market in Asia PAC and of course India?



AM:If you look at our industry, our industry is recession proof. There are two positive reasons .One in UK and one outside UK, In UK BT serves residential, SME, government and we provide communication to them viz broadband, telephone data communications.

These are what we call basic needs and we believe that recession isn't going to change the utilizations and behavior of using those resources, so UK market is pretty recession proof.

Now, if you look at BT global service business, which is in business of supporting MNC's, who want the business to grow across the world, we provide them communication networks and IT services so that they can keep of expanding their business.

We believe that based on what we have picked up from our customers in last two months is that we are even in a better position to help them grow.

Let me explain how. Lot of MNCs today are facing challenges in terms of cost cutting which is forcing these companies to go to basics and relook at the the call structure, the cost base etc and ask themselves where enterprises can reduce the cost.

This is a financial storm and I have to make sure as to why I am growing the business. I am not going to grow business in a stupid way. In other words making loss, while growing business.

So the first question that the people ask is how can you help us. I have this kind of call structure where can you help me reduce the call levels.

In BT global services we have been doing this work from so many years and our strength is to help all our customers operate their ICT and look how they are using their ICT tools to address their ICT requirements.

We simply say to our customers, you focus on your core business of serving customers, design your products and promoting your brand. You use the ICT and we will work with you to manage the ICT spending so that you can have the immediate call savings.

CIOL: Would be great if you could quantify the savings that a CIO has been able to make following his engagement with BT?.



AM: Obviously it depends on scale and what they are doing today. We are are able to offer solutions to these customers who are under lot of pressure to reduce costs and offer them 16-20 percent cost saving immediately.

So customers focus on their core business while we offer them 15-20 percent reduction . Customers love this because this is going to give them immediate benefits so that they can save their money and focus on how to handle the financial crisis that they are managing right now.

We are doing this from the last so many year and we believe we are the best when it comes advising customers. I see this an opportunity rather than one of gloom or doom.

Of course there are lots of new challenges but it us about how to help customers go through the current challenges and become even more stronger when the storm is behind us.

CIOL. BT has come a long way from being a a 'pure connecting player' to one with massive focus on what BT terms as a networked, converged world. Why has focus on providing IT and communications services become so important for BT when it prided and believed it can become leader purely on basis of being a connecting player only?



AM: Connectivity is not the only thing that we are interested in. Simply, If you look at whole point of connecting, the price point has dropped and increasingly it is very difficult to differentiate you connectivity from you competitor. The whole thing of connecting has got commodotised.

If you want to can grow our business, you have to create a differentiation and look at the whole ecosystem through which our customer operates. If you look at various industry players, we found out that the ecosystem is actuality very big comprising of various players that come together to help customer deliver their services.

These changes demand a new kind of company, one that can provide a single point of contact for high-performance, seamless global networking. .We thought at BT that we have infrastructure that can help our customers to operate their IT on global network with front called professional services or advisory services to the customer

Under the redesigned operating model, we were able to help our customers to run their IT applications on new global platform and we have worked diligently to transform our own organisation to offer this new breed of services: we call them networked IT services

CIOL: Coming to the acquisition of Frontline by BT, Doesn't acquisition of a pure IT player which provided IT consulting, systems integration, and IT application management outsourcing put you in a direct conflict with otherwise business pastures of say an Infosys or Wipro?



AM: Not really. There may be a small overlap but there a lot of complementary strategy between . Wipros and Infosys . Actually with the acquisition of Frontline, we have brought new portfolios to our business like we were not in past in outsourcing business in Asia and now because of acquisition we can do outsourcing for our customers in Asia. If they want to outsource entire services to us, Front Line helps to deliver in system integration.

CIOL: Coming back to India, how big is whole networked IT market in India and how much is adressable oppurtunity for BT.



AM: India's networked IT market is expected to be 24 billion euro in 2010-11, of which addressable market opportunity for BT is 4.4 billion euro, which is about 18-20 per cent share

India is a huge market for BT and there is a challenge of scale . We have able to achieve 40 percent growth for India. We expect to continue our momentum in 2009 also.