Telecom companies test new waters

NEW DELHI: Software companies focussed on the telecom sector no doubt suffered reverses in the aftermath of the telecom slowdown but are slowly picking their pieces together by embarking on a phased expansion. While some like Pune-based Mahindra-British Telecom (MBT) and TCS have adopted the path of geographic expansion.

Amit Mehta, VP (Telecom Strategy and Planning) of MBT said that MBT did see a slowing of business but is now expanding its focus into other regions. It has also started doing business with a number of American carriers namely MCI WorldCom and AT&T due to which there has been stability in the company's earnings. During the last fiscal, 83 percent of the company's earnings came from its parent company British Telecom. In order to further spread its risk, MBT has also initiated steps to set up presence in the US and European market. MBT has just opened offices in both the continents and hired eight marketing employees in the US and five in Europe.

TCS, another company with sizeable exposure in the telecom sector, also has plans to foray into the European and African markets, in a bid to expand its addressable markets. The telecom earnings of the company has seen a decline from about 25 percent during boom time to the current 17 percent after the slowdown.

Said N Sivasamban, Telecom Practice, TCS, "We are exploring new markets and increasing our employee base from 4,000 to over 5,000 in the next one and a half years." Companies believe that the business in the telecom sector is slowly picking up. Over the next year, development of new markets along with steady growth in developed markets would ensure steady earnings for software companies with huge exposure to the telecom sector.

Many software companies like SISL(Siemens Information Systems Ltd.) and HSS (Hughes Software Systems) with sizeable telecom exposure have majorly diversified into areas like banking and BPO space to beat the slowdown. While SISL has crystallized its plans to move into the BPO space by spinning off a separate company, HSS has only just announced its intent and is yet to firm up its plans. HSS said that it would set up its own BPO unit. In the BFSI space, both SISL and HSS plan to acquire domestic companies which either has a good reference base in the country or has some niche competency in the sector.

SISL already had a captive center in Bangalore, which is being expanded, and spun off into a separate company to cater to third party needs. SISL, with an impressive customer base in the overseas market, would have a ready reference base for its BPO operations, which is very critical in the business. It has already lined up three international customers. The center, which is already operational, has a current capacity of 300 seats. This would be ramped up to 500 seats within three months with the total strength moving up to 1,000 seats by the year-end.