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MUMBAI
APRIL 23, 2007
It was a balmy September day last year, when a cheery Mike Zafirovski took to
stage in London. The Nortel CEO had been in charge of the company for around
nine months, and he had some important announcements to share. Nortel, the
multinational Canadian telecom equipment manufacturer was taking a stride into
the future, donning a new robe. It would not focus on manufacturing alone; it
would narrow its product portfolio and allocate more R&D to specific
technology areas such as IMS, WiMAX, IPTV, etc. And above all, it would look at
service in a way it never did before.
Months later, Nortel is putting that roadmap into practice. The company has
created a separate division, labeled as Global Services and offers a host of
services. Currently, the division accounts for some 20 per cent of the total
revenue earned by the company. Globally, Asia plays a major role in this new
setup, being one of the fastest growing markets for the company.
To add muscle to its team, Nortel has brought in Praveen Kumar as the vice
president, Global Services (Asia). Kumar is an industry veteran, and was
associated with IBM's Services division prior to joining Nortel. A buoyant
Kumar talks about how Nortel is not only talking big about services but also
putting money where its mouth is.
“Services is, without an iota of doubt, a major focus area for us. As our
CEO had said, we will no longer be a product company that offers services but a
service company that offers products,” he says.
Quite big words from a company that till some years back was in the blues.
Nortel's history goes way back into the past, in fact into the early twentieth
century. Suffice to say, by the nineties it was one of the biggest telecom
companies in the globe. Since it was one of the few fiber optic manufacturers,
it made merry during the Internet boom, laying miles and miles of costly cable
and equipment and profiting handsomely.
According to estimates, when at its peak, Nortel accounted for more than a
third of the total valuation of all the companies listed on the Toronto Stock
Exchange.
And then, death knell sounded. The market collapsed and Nortel was the
biggest calamity. Its capitalization fell from S398 billion (Canadian Dollars)
in 2000 to less than $5 billion (Canadian Dollars) in 2002. Later on, frauds and
scandals rocked the company.
Consequential developments lead to sacking of the management team and
re-organization of the whole board.
That's when, Zafirovski took charge.
The Phoenix arises
All that was last year, till Zafirovski announced the three-pronged
strategy, focus on mobility and convergence, enterprise transformation, services
and solutions. “Currently we offer close to 70 services to carriers and
enterprises, right from systems integration, network deployment and management,
application hosting, and others,” adds Kumar.
Speaking of Asia, as of now, Nortel currently has close to 100 odd customers
for its services, “purely services” clarifies Kumar. The company is also
shifting the Asian headquarters of the services division from Australia to
Singapore. Little wonder, as China is one of the fastest growing market for the
division and Singapore is more centrally located in geographic terms.
Alliance with Microsoft has been bolstering Nortel's services and
solutions. But it is the partners and channel that the company intends to
utilize for the big push. “Our partners will play a major role in the whole
services push. We refer to them as service delivery partners and intend to
engage them in a variety of ways,” adds Kumar.
Competitive or Collaborative
By offering services is not Nortel threatening the likes of IBM and the
rest? Kumar shakes his head in the negative. “We know our strength lies in
technology, thus we will offer the services through our partners itself, unless
the client insists otherwise,” he adds. A case in point is Bharti Airtel. Some
time back, IBM Services had won the Bharti Airtel's 10-year infrastructure
management contract. On the same hand, Nortel is serving Bharti's customers by
running an IVR service at its NOC in New Delhi. “We are in the process of
centralizing our services, and the NOC in Delhi will be a major servicing and
back-end hub. While Singapore will be the strategic hub for Asia,” says Kumar.
But then, what about customers that do not use Nortel's equipment? Will the
company push for the same, a case of toe in the door? Kumar cites the case of a
major company in Hong Kong, “We are managing their services and the complete
infrastructure is based on Cisco hardware. We are open to any kind of vendor and
equipment environment. In fact we intend to closely collaborate with most of
them. Take the case of Microsoft; the company is now offering support for Nortel
systems in its Vista OS. So we are not looking at pushing or peddling our
products to clients,” he clarifies.
Asian odyssey
Currently, Nortel is working in 22 countries in Asia, with China being the
biggest and the fastest growing market (in fact it has three JVs running in
China). “Other than that, we are focusing on Australia, Thailand, Indonesia,
Philippines, Japan, India and others. We are investing heavily in labor and in
skills in all these countries,” says Kumar.
What about India? “Well I am very gung-ho about India and am hoping that in
the next few years it will be as important market as China. In the few months
that we have been here, we have already signed by around eight customers for
services solely. Shortly, we will make a few big splashes again with big-ticket
announcements. Hang on,” he smiles.
Kumar is all raring to go and take charge at the Singapore office, waiting
for the complex to be readied in the next few days. In the past few years, there
have been many similar announcements made by MNCs; some have succeeded while
some have failed. Will Nortel be able to make the leap of faith, is a story that
will unfold in the coming months. As of now, the signs are ominous.
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