Tata Communications Ltd, formerly Videsh Sanchar Nigam Ltd, will pay greater attention to its managed services business, which is expected to generate a fourth of the company’s revenue from data services in a couple of years, said a top official.
“We are fighting with our own businesses, because if we do not fight, then someone else will take it away,” said Srinivasa Addepalli, chief strategy officer of TataCom. Managed services, which include cloud computing solutions, managed ATM services and video conference solutions, accounted for 18 per cent of the company’s revenue from data services in 2011-12. TataCom reported a revenue of Rs 14,196 crore last financial year, of which the share from data services was 40 per cent.
Its voice services business and South African subsidiary Neotel accounted for the remaining 48 per cent and 12 per cent, respectively.
Addepalli said the company’s enterprise customers were increasingly seeking “cloudification” of the technology they purchase.
The company, whose mainstay so far has been bandwidth and data storage services, has a strong infrastructure of submarine cables and data centres. While it offers bandwidth to other telecom service providers on wholesale lease, it provides the same to enterprises on retail basis along with the data storage facilities.
TataCom is now going beyond offering just the infrastructure capability and taking the responsibility of managing the service offering. It usually works on a pay per use basis, instead of leasing arrangements.
“When you move into managed services you have sticky relationship with your customers as you start to manage their activities and manage things on their behalf,” said Addepalli. “We do not see providing managed services in the absence of network services. One of the two will go first.”
Network leases are usually a 12-month contract renewed every year. But for managed service contracts, customers prefer a three or a five-year contract, as they want certainty.
The company's recent announcement of technology arrangement with Formula 1 management explains the same. In this case, while providing connectivity of their different race tracks to their central headquarters comes under network services offering, providing hosting facility to their website and bunch of other services including security comes under managed services.
The company has already identified three areas to boost its managed services: Cloud computing, mobile broadband and video conferencing.
Working on this strategy, the company is improving its solutions for video conference facilities across multiple technologies and looking forward to build services on low latency network for mobile operators so that they could monetise their investments. It has also decided to managed services through cloud based applications.
TataCom’s focus has so far been on the banking and financial services industry in India, and media and entertainment industry globally for its data services business. It is now considering the healthcare and education industries to achieve the growth target in managed services. It expects to get into one of these two sectors by the end of the current financial year.
