Transcript Business of Communications

The creation of a thousand forests is in one acorn
- Ralph Waldo Emerson
Business of Communications
State of the Market
Subhash Dhar
Vice President & Unit Head,
Communications Service Providers
© Infosys Technologies Limited 2004 - 05
Safe Harbor
Certain statements made here concerning Infosys’ future growth prospects are forward-looking
statements which involve a number of risks and uncertainties that could cause actual results to differ
materially from those in such forward-looking statements. The risks and uncertainties relating to these
statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings,
our ability to manage growth, intense competition in IT services including those factors which may
affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled
professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration,
restrictions on immigration, our ability to manage our international operations, reduced demand for
technology in our key focus areas, disruptions in telecommunication networks, our ability to
successfully complete and integrate potential acquisitions, liability for damages on our service
contracts, the success of the companies in which Infosys has made strategic investments, withdrawal
of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring
companies outside India, and unauthorized use of our intellectual property and general economic
conditions affecting our industry. Additional risks that could affect our future operating results are
more fully described in our United States Securities and Exchange Commission filings including our
Annual Report on Form 20- F for the fiscal year ended March 31, 2005 and the Quarterly Reports on
Form 6- K for the fiscal quarters ended June 30, 2004, September 30, 2004 and December 31, 2004.
These filings are available at www.sec.gov. Infosys may, from time to time, make additional written
and oral forward looking statements, including statements contained in the company’s filings with the
Securities and Exchange Commission and our reports to shareholders. The company does not
undertake to update any forward-looking statement that may be made from time to time by or on
behalf of the company.
June 11, 2005
© Infosys Technologies Limited 2004 - 05
Communications is Changing
Content
Traditional – Voice
Now – Data & Video
Medium
Traditional – Fixed Line
Now – Wireless, Cable & Satellite
Players
Traditional – Phone companies
Now – Cable, Satellite, Media, Power, anyone
Communications
Traditional – two-way, interactive, real time conversation
Now – Real-time and Asynchronous, Multi media, Multi-modal, many-to-many, Private and
Public
June 11, 2005
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Phone is like our wallet
We don’t leave home without it
We don’t like sharing it … very
personal
It is one of two personal effects you
see everyone pull out of their
pockets at airport security
Phone wants to be our wallet
It already has our business card,
phone book, family pictures, bills
and receipts, discount shopping
cards
It doesn’t yet have money but it has
several payment services
Pickpockets want to steal it from us
elements of mobile banking exist
Losing it can cause us lot of
inconvenience, frustration, even
trauma
consumers in Austria use cell
phones as train tickets; in
Finland use phones to pay for
car fuel
June 11, 2005
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Phone wants to be many of these in future
Entertainment Centre
Travel Agent
Shopping Assistant
Electronic keys to car, work, home
Global Positioning System
Health monitor
Wealth monitor
Etc. etc.
So which one will it be?
… Actually most of the above …
pundits call it CONVERGENCE
June 11, 2005
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What is Convergence?
After wide adoption of Internet, there was a lot effort and money put
behind making the Internet Protocol (IP) of communication into a
carrier grade one
As a result over the past decade, several technologies have been
developed making it possible to carry voice, video and data together
on a single line or network. This is popularly called convergence and is
fundamental to most new and next generation services
It promises to save billions for telecom operators (CSPs) in operating
costs and also enable several new services and revenue streams
However, to take advantage of this, CSPs must make large
investments in transforming their networks and support systems
June 11, 2005
© Infosys Technologies Limited 2004 - 05
Major Trends in Communications Markets
Worldwide wireless voice time has exceeded fixed-line
voice time and gap is widening indicating high and rising
demand for wireless
Corporations and Internet households are hungry for
always-on data connectivity leading to high and rising
demand for broadband
Deregulation has opened doors for new players in this
segment
Convergence is arguably the most powerful transformation
force this industry has seen
June 11, 2005
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Trouble for Incumbents …
Armed with deregulation & convergent technologies, new entrants are
able to cherry-pick high value customers from incumbents and sell
them high margin services
New entrants are big boys like cable, power and satellite companies
and also startups with a bleeding edge technology and nothing to lose
New entrants are also large Fortune companies in financial services,
retail and other segments who can white label telecom operators
offering and build affinity customer groups
As they compete with new powerful competitors, incumbents have to
also maintain traditional voice services where revenues and margins
are constantly declining
June 11, 2005
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… But Convergence means Opportunities for All
Fixed line incumbents can offer data, TV and video services
need to rollout high speed broadband network and systems to
every home and business and invest in video content
Cable companies can offer telephony
need to upgrade their network for two way communications and
invest in sophisticated billing and customer care systems
Wireless companies can offer broadband for data and video
need to invest in cutting edge technologies and video content
Everyone has to protect home turfs
Everyone has to transform networks or pay for transformed networks
Everyone has to watch out for nimble footed startups
June 11, 2005
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Everyone has to re-think operating model
Services of future will be many in number, have shorter life
spans and will change frequently. Will not make sense to
have dedicated networks, systems and organizations for
each service as in the past
Extensive automation and pushing customers to self help
models will be important
To better utilize assets and get advantage of scale, best
practices and continuous process improvement, CSPs will
have to think global operations and global partnerships
June 11, 2005
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CSPs are thinking global in IT and Operations
For domain expertise, they look for partners who understand business
rules and emerging technologies
For rapid time-to-market, they look for partners with flawless execution
and scale management capabilities
For building new operating models, they look for partners well
endowed and investing in flexibility, learnability and reuse
For realizing true potential of convergence, they look for partners who
understand the interplay between Network, Systems and Services
CSPs’ need is super-sized. Hence they look for scale players
June 11, 2005
© Infosys Technologies Limited 2004 - 05
CSP business at Infosys
Was started in October 2003 as part of industry based reorganization
Until then, most of our Communications business was outsourced
R&D work for telecom equipment manufacturers
In a span of two years, CSP has become one of the fastest growing
businesses for Infosys with over 5,000 people
$ Million
FY04
FY05
CSP Revenues
111
199
79%
Total Telecom Revs.
176
295
68%
16.56%
18.53%
12%
Telecom as % of overall revs.
June 11, 2005
Growth
© Infosys Technologies Limited 2004 - 05
CSP business at Infosys
Besides Application Development & Maintenance, services
bought by CSPs include
Enterprise Solutions
Process Design
Network Design
Network & Infrastructure Management
Process Management
Service Testing
4 of top 10 CSPs of the world are our clients
June 11, 2005
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Case study – Customer Self Service
Top CSP in the US
Runs huge customer services costs on its call centers
Chose Infosys to build online self-help portal for its
customers
Online self help costs the company 90% less and also
came handy in a widespread union strike
Enthused by this, client plans to add a voice portal for selfhelp
June 11, 2005
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Case study – Leading ISP becomes a phone company
A leading Internet Service Provider in the US
Flagship dial-up service under pressure from broadband
services of phone companies and from low cost dial-up
players
However, running over competitors broadband, VoIP
offered a new source of revenue to help meet the decline
in data business
Chose Infosys to build and completely test its VoIP service
before launching it successfully in April 2005
June 11, 2005
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Opportunities & Challenges
Help CSPs meet cost imperatives
unifying & consolidating systems and processes
rejuvenating & sustaining legacy systems
leverage GDM for transitioning process and operations
challenge of scaling very rapidly
Help get new services to market quicker and smarter
shared systems architecture
automate customer service, portals
consolidate process and operations
offshore networks and service support centers
challenge is acquisition of expertise in new technologies like VoIP, IPTV
etc.
June 11, 2005
© Infosys Technologies Limited 2004 - 05
Summary
Deregulations and Convergence are driving competition
Competition is driving prices down for voice business
Wireless and Broadband are growth areas
CSPs need to contain costs and invest in new network,
systems, services and content
They need to think differently as they rollout new services
They need partners who can manage scale and speed
Infosys has the right strategic focus on this segment
June 11, 2005
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We believe GDM will be to CSP’s Operating Model
what Convergence has been to their
Business Model
June 11, 2005
© Infosys Technologies Limited 2004 - 05
Thank You
www.infosys.com
© Infosys Technologies Limited 2004 - 05