Beating Recession using Communications Services

Recession or not, it is well accepted today many of the global economies are facing a
slowdown. The combined effect of the mortgage crisis, energy prices and consequent
meltdown of equity and debt markets have taken their toll on even some of the resilient
economies like China and India. The financial services industry is worst hit; other sectors
including IT, auto and retail are on the downturn. Surprisingly, telecom seems to have
bucked the trend in most countries and is continuing to show strong growth in services
consumption and infrastructure investments.

Global telecom network revenues have continued to grow at an average of over 10% with
mobile growing at over 15%. Mobile device sales are expected to grow at 8% cagr over
the next 5 years with growth expected to surpass 10% in emerging markets like India and
China where subscribers are growing at a scorching pace of over 30% p.a.. This strong
growth is also reflected in the investment confidence of telecom operators, including
multi-billion dollar acquisitions in India and Africa; capital investments increased from
USD 47.5 Billion in 2Q07 to USD 58 billion in 2Q 2008.

Telecom services have become quasi-utility services, with consumer dependence

somewhat beginning to mirror their dependence on utility services like gas and electricity.
There is evidence that during periods of financial weakness, consumers will cut-back on
purchases of durables, gifts and other discretionary goods but might splurge on activities
that create greater social bonding and sharing, like communication, entertainment, and
networking. Additionally, all economic parameters leading to the slowdown have an
interesting positive impact on telecom services. For instance, higher fuel prices result in
less official and personal travel with a consequent growth in the usage of telephony,
messaging, and conferencing services.

In the business context, the pressure

to manage revenues and profits is all Innovative
the more intense during such times. Business
Investors thirst for positive news and models
are willing to reward those that meet
expectations; on the other hand, even
small failures are magnified and the
response is harsh and immediate. Growth in
While cost cutting is the typical Uncertanty
focus of most managers during
uncertain times such as these, there
is a lot more that they need to do to Global Optimal
drive business growth. Expanding Expansion Costs
into global markets and developing
innovative business models are two
strategic levers for businesses to
achieve growth when the markets
around them have slowed down. Whatever the strategic objective, communications
technologies and services will play an important role, nay, a critical role in enabling the
corporations of tomorrow.

Expansion: Developing countries, growing at over 8.6% p.a. over the next five years,
provide significant new market opportunities for large corporations that face demand
saturation in the developed countries. This rapid growth, coupled with the fact that 80%
of global population will be in the emerging economies, makes these markets a must-
enter for most multi-nationals. Additionally, new leaders from the developing economies
are making their presence felt in global markets. Companies are able to enter markets
faster, launch products and services across all their markets simultaneously and create
globally uniform customer experiences and brands. This increased globalization – in both
directions – has become possible due to better connectivity and collaboration capabilities
that are now available.

Global Virtual Private Networks (VPN) using MPLS and Global Ethernet solutions
enable the creation of secure, multi-location wide area networks with high levels of
scalability and flexibility. Bringing new offices online or increasing bandwidth between
them or implementing a new application globally has become almost as simple as
installation of a plug and play device. Enterprise applications including ERP, messaging,
and security, run an outsourced or managed basis by service providers, ensures that all
stakeholders can have a seamless experience, irrespective of location and access
mechanism. These features are particularly important to financial services and retail
companies that tend to deal with large numbers of employees, partners and customers in
all the markets they serve, yet want to leverage their global brands and services
capabilities.

Innovation: Global expansion also results in globally distributed teams based on the
availability of best resources to run global businesses. Supply chains, downstream and
upstream, tend to be spread across countries but need to work seamlessly as an integrated
unit. Managing people across
locations and building a shared
organization culture is the biggest
challenge for companies in this
new world. Moreover, real-time
collaboration across such
organizations is critical to the
creation of new products / services
and taking them to market ahead of
competition. Companies today
seek face to face globality and
communications networks and
services have risen to the occasion.

Whether it is high definition video conferencing (Telepresence) or next-generation

content delivery networks or extensive wireless networks, there are a variety of platforms
available for businesses to engage more effectively and in real-time with their
stakeholders. It could be a gaming company seeking to launch a new online game with a
faster download window of 45 minutes against its earlier 24 hours; it could be a BPO that
wants its engagement managers to brief their clients face to face every morning instead of
waiting for the monthly on-site reviews. Or it could be a fashion products company that
wants to provide video-based training to its sales teams and agents across a continent the
day prior to the launch of its next best-seller. Finally, it could be a bank that uses mobile
ATMs with wireless connectivity that opens up whole new, untapped rural markets for
banking products.

Cost Management: Traditionally, businesses have focused on cost reduction during

tough times, usually, by going after G&A and marketing costs. However, global
expansion and innovation do add new administrative and marketing costs and create a
situation where businesses have to find new avenues of improving profitability. The
emergence of hosted or managed services for communications services and applications
enables businesses to expand their capabilities without many of the associated costs.

Managed services like messaging and security, not only reduce operating costs but also
free up valuable capital resources. Similarly, data center outsourcing is increasingly
becoming acceptable, even amongst traditional non-believers like banks. Additionally,
there are several customized managed services to address the demands of specific
industry verticals. For instance, hosted contact centers enable mid-sized BPOs to scale
their operations with limited up-front capex and pay as they expand their business.
Services like public Telepresence rooms, in addition to their contribution to innovation,
provide considerable savings in cost, eliminating travel and other associated expenses as
well as providing other intangible savings in carbon emissions and employee productivity.

The world has seen more changes in this decade than it has ever seen in the past. The
next few years will probably accelerate this change, in political, economic and social
spheres. This is also a world that is as “coupled” as it can get, through a complex and
intricate web of relationships. Connectivity and collaboration are the heartbeats that drive
this new networked world. It is a world where the strategic adoption of communications
and services will play a decisive role in differentiating winners from the also-rans.

For a more detailed discussion on how Tata Communications can work with you to better
manage the new world of communications, contact: