Riding On India’s Growth Wave
Digital India and Smart City initiatives have presented Ericsson India an opportunity to transform itself into a tech solutions provider
Paolo Colella is relatively new to India, having taken over as the country head of Swedish multinational Ericsson barely six months ago. Yet, he exudes the confidence of someone who has been around for quite long. That’s probably because he has a mission to accomplish: that of transforming the company from a pure-play telecom equipment manufacturer into a technology solutions provider with a diverse business presence spanning IP networks, cloud, TV and media, operating support systems/business support systems (OSS/BSS), and industry and society verticals.
He also speaks with the confidence of a man who knows his company has been present in the country for more than a century. In fact, India is among Ericsson’s biggest growth regions today; it contributed 5 per cent to its overall net sales in FY15 behind China and the US. Ericsson India’s full sales for FY 15 stood at Rs 10,184 crore.
“India is in a magic moment after it has embarked on a digital journey. As a result, almost every industry is going through a transformation. With our experience in mobile communications and our expertise in combining technology and services, we can help operators and other industries to exploit the power of digital mobility,” says Colella, who has worked for Ericsson across the UK and Italy before coming to India.
According to Colella, Ericsson has carefully chosen these targeted areas for the transformation. “They are adjacent to our core business and offer a high degree of software and professional services and strong growth potential. This is an opportune time for us to introduce our whole portfolio of solutions and services in the Indian market and grow our presence here,” he says.
Ericsson is seeking to align its businesses everywhere. “At a global level, 66 per cent of our business comes from software and services — just 16 years ago, 73 per cent came from hardware. Now, with industries and even whole societies being disrupted by mobility, broadband and cloud, we are accelerating our transformation,” he says.
Over 40 per cent of the world’s mobile traffic currently passes through the network equipment supplied by Ericsson, and the company manages networks that serve over a billion subscribers.
The company is keen to cash in on the Digital India and Smart Cities initiative of the government. It is confident of generating one-fifth of its India revenue from non-telco business by 2020. While the telecom operators here are looking to shift to 4G, Ericsson is looking at expanding its leadership in 5G services.
Today, Ericsson India is on an aggressive hiring spree. In the first quarter (company follows the January-December financial year,) it is set to hire over 100 resources in the new and targeted business areas. Ericsson has also created a new unit called ‘IT solutions and services’ to accelerate its readiness in OSS and BSS, TV, media, cloud, information and society. It has also created a new ‘industry and society’ customer unit aimed at tapping the new ‘Smart City’ opportunities in the country.
“We are looking at supporting the Indian government’s initiatives for smart grids, intelligent transport systems and security systems. The rollout of 100 smart cities in India will give us a huge platform to deploy our smart city solutions,” says Nishant Batra, vice-president and head of Engagement Practices at Ericsson.
New opportunities are opening up for Ericsson in India as numerous industries including transportation, public safety and utilities are realising the transformative power of a fast-moving information and communications technologies (ICT) environment with India moving on in its journey to become ‘digital’.
“India has embarked on a digital journey and as a result, almost every industry is going through a transformation. We are well poised to transform Ericsson into a leading ICT provider even as we see the country transforming itself into ‘Digital India’” says Colella.
On Cloud Nine
According to Colella, cloud is strategic for Ericsson in several aspects. Ericsson uses cloud technology to build own cloud from which it serves new types of solutions to customers in telecom and other industries. These solutions can be used by customers to develop their own commercial cloud offerings, he says. Ericsson has three complementary perspectives in the cloud space that includes industry transformation, IT and operations transformation, and infrastructure transformation. The third one, Colella says, will be solving the growing needs of security, governance and orchestration. The company feels the Indian telecom operators are already taking first steps by virtualising telecom functions through network functions virtualisation (NFV), which decouples hardware and software. The main focus for Ericsson is to industrialise NFV and be open to work in different execution environments. “We add value to improve network performance and stability, driving industry initiatives to automate orchestration and life cycle management and ensuring the possibility to migrate to NFV with feature compatibility,” says Batra.
In the operator IT cloud, IT functions such as customer relationship management, product catalogue, billing, and network management are virtualised for internal use. India is the R&D hub for Ericsson and its R&D facilities are spread across Bengaluru, Gurgaon, and Chennai. The focus areas and size of each of these R&D centres are different, says Colella. The Bengaluru centre is focused on IP and cloud technologies and more than one-third of the global R&D workforce operates from this centre.
The real challenge in India is to overcome the quality of services offered. Increasing call drops and lack of ubiquitous mobile broadband availability are impacting customer experience; the service providers need to ensure that customer experience is given utmost priority when launching new services and technologies.
“Growing demand for data and the launch of 4G/LTE by all leading players will require more spectrum. At the same time, optimum pricing of spectrum and a clear roadmap of spectrum availability will be key concerns for service providers,” says Rishi Tejpal of Gartner. To improve indoor app coverage for mobile consumer and business customers, 100 operators, globally, have adopted Ericsson’s Radio Dot System — an innovative indoor small cell solution that was commercially introduced in 2014.
Ericsson enjoys predominant position in the networks business. Recently, it bagged a multi-million dollar, three-year contract from Vodafone India for its 2G network and rollout of 3G networks in 10 states spread across five telecom circles. In 2016, Bharti Airtel signed a four-year agreement with Ericsson to expand 3G WCDMA network across eight telecom circles in India. The new agreement includes rollout of 3G services in both UMTS 2100 MHZ and UMTS 900 MHz band in three circles. Ericsson recently (Sep 2015) entered into a four-year contract with Airtel to rollout 4G network in Delhi and four other circles.