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Sandeep Phadke, Tech Mahindra: 'Taking full advantage of change means never sitting still.'

Tuesday 6 January 2015 | 13:54 CET | Background

Although Tech Mahindra is one of the larger IT service providers in the telecom sector among others, it's relatively unknown outside the industry. "We are the best-kept secret in the telecom industry," says Sandeep Phadke, Tech Mahindra, Head Continental Europe, in a discussion with Telecompaper on Tech Mahindra's ambitions, and the trends which are going to change the telecom landscape radically in the years ahead.

Although Tech Mahindra is one of the larger IT service providers in the telecom sector among others, it’s relatively unknown outside the industry. “We are the best-kept secret in the telecom industry,” says Sandeep Phadke, Tech Mahindra, Head Continental Europe, in a discussion with Telecompaper on Tech Mahindra’s ambitions, and the trends which are going to change the telecom landscape radically in the years ahead.

Phadke has worked for Tech for ten years now, five of them in his current position. From The Hague he is responsible for guiding the Indian technology concern’s business units active in Europe. In the Netherlands Tech Mahindra has offices or development centers in The Hague and Eindhoven. There are four such centers in Belgium, including two in Brussels, Antwerp and Charleroi.

Tech Mahindra operates as an IT service provider in Europe in two areas: telecom (operators, ISPs) and other verticals like Manufacturing, Banking and Financial Services, Retail, Healthcare etc.

The telecom vertical  makes up around 52 percent of sales, although the enterprise branch is growing faster. Within the telecom division there are six business units, where Phadke says Tech Mahindra offers end-to-end services  in both IT and Network services. Phadke believes network and IT are gradually coming together. The same applies to network and IT infrastructure. “Here we can profile ourselves as a one-stop-shop. That’s something many other IT service providers or infrastructure vendors who also do network administration, cannot do.”

The six Tech Mahindra BUs:

  • Applications (BSS/OSS systems) including IT Managed services (managing IP infrastructures of operators, ISPs etc.). This is the bread and butter unit accounting for almost 60% of the telecom revenue.
  • Network services, one of the concern’s larger units, with 6,000 employees, in particular in Europe. Well-known Benelux clients include Base. Phadke: “We have taken over a lot of activities here from network suppliers like Huawei and Ericsson, who maintained and managed their own network equipment for operators. Where we were initially subcontractors for parties like Alcatel-Lucent, now we provide such services directly. I believe we are more cost-effective, more flexible and better equipped to manage the network environments of a variety of vendors well.”
  • Business Process Outsourcing. This mainly involves taking over back office activities and management of contact centers. In India Tech Mahindra manages a contact center for Hutchinson, with around 10,000 agents, for its back-office and IT.
  • Value Added Products. Around a year and a half ago, Tech Mahindra took over Comviva, one of the larger providers of mobile payments. This is still a limited market in Europe. In many African countries, where the banking infrastructure is weak, up to 50 percent of all transactions are done using mobile payments. In African countries where operators like Airtel and Orange operates, Tech Mahindra is also responsible for the mobile payments routed through those operators. In Nigeria Tech Mahindra even has a banking license, so that it can process mobile transaction traffic between operators.
  • Infrastructure management. This includes datacenters, all locations where hardware is managed. There is increasing collaboration with the network division, partly in light of the previously-mentioned convergence between networks and IT environments. Among others Tech Mahindra manages the datacenters of operators like BT, AT&T, KPN, Mobistar and Base. For KPN Tech Mahindra was responsible for the consolidation from seven to two datacenters, among other things. This is one of the largest Bus in Tech Mahindra, with around 8,000 employees.
  • Sensors. This small but rapidly-growing division (around 200% on an annual basis) encompasses everything involving IoT, M2M (such as smart metering), new and emerging communication technologies. The volume of communication between equipment itself is growing enormously, both for corporate and private ends. This also offers many new opportunities for operators. To this end Tech Mahindra recently signed an agreement with Dubai and Milton Keynes in the UK, where a smart-city concept is being rolled out.

Changes keeps accelerating

Tech Mahindra is a technological company by origin, a company of engineers and masterminds. Engineering, developing and applying knowledge itself remains one of the company’s major pillars. Phadke: “Technological change keeps accelerating, but so does development in the commercial area. No one would have thought five years ago that with its SaaS services, Salesforce.com would become so dominant.” That’s reason enough for the company to invest hugely in the development of new knowledge to stay ahead and look ahead. Around 10 percent of the R&D budget goes on the development of knowledge about, and application of, new technologies.

The Indian technology concern’s view of is that staying out in front in technological development and knowledge works best by sowing many seeds. “We create many internal start-ups which focus on specific new development. Naturally not everything survives to maturity, but it’s certainly a flexible way of staying innovative. I wouldn’t claim that we’re ahead in every area where we operate. But we definitely have a clear strategy: continually develop new competences, never sit still. This doesn’t mean there’s no structure in what we do in R&D terms. Ultimately the intention is that we convert new knowledge and applications into clear standardized processes, where we can apply new technological knowledge easily, widely and quickly.”

Looking far ahead becomes difficult

The speed at which technology evolves changes and introduces change means it is almost impossible to look far ahead now. Tech Mahindra has also had to adapt to this, believes Phadke.

“Where we initially had a roadmap with which we could look five years ahead, now we don’t look further than the next three years. There’s little sense in planning further ahead, because you can no longer properly predict which direction technology will take and which of its applications will be successful or not. Neither do we want to pin ourselves down too much to plans for the longer term. It’s more important to be flexible in your strategy. Certainly clear, but also able to change direction quickly in our market approach.”

The advantage of such an approach is that it’s not that important what changes occur in a market, a sector or in your own company. “We are oriented toward being able to switch quickly and to embrace change, to acquire new knowledge and to incorporate the changes in our processes.”

Telecom cannot permit itself any failures

 

In Phadke’s view this is also apparent in the roll-out of new network or IT infrastructures. Thus Tech Mahindra completed the transition from more than 70 vendors for Mobistar in three and a half months, between August and November. “We can actually do that because we work with standard processes. Not cumbersome processes, but rather ones which are extremely clear. Many failed IT projects come about through a lack of clarity and poor communication during the transition from an old to a new environment, or from an old to a new administrator. But the telecom market is one which cannot permit itself any failed IT projects on a large scale. Neither can we permit ourselves that, because it’s much easier to damage your image than to build it up.”

Phadke notes that Tech Mahindra obviates any failed IT and network projects by ensuring among other things that the responsible team works well together, communicates well with each other and with the client throughout the entire trajectory, and adjusts expectations where necessary. “Another challenge is often a lack of cooperation, for example when you take over management of a network or IT environment from another party. You need to anticipate this, sometimes by over-engineering or being more prepared for problems than necessary.”

The impact of regulation

Phadke believes that knowing the regulations has become more important in recent years. “Regulations and their changes exercise a major impact on our clients. For example that’s how the regulator Ofcom ordered BT to separate its infrastructure from its services eight years ago. That became BT Open Reach. We worked together with BT through the transition. Then you absolutely need to be aware of exactly what the regulations entail. Introducing SEPA was also a major change in the EU, with a great deal of impact on the activities of telecom providers. We got to work early on this to draw up an inventory of what the possible consequences might be for the market. A more recent example is opening out cable in Belgium, which had consequences for Telenet among others. Now we are also helping Mobistar, which wants to operate on Telenet’s cable network.”

Phadke doesn’t believe that all the EU regulation being introduced is equally fair to the telecom market. It is highly oriented towards consumers, and is not always as positive for operators. In Norway, for example, you can see that Tele2 has built up a complete network, yet it didn’t get any spectrum at the recent frequency auction. This means the operator can’t roll out a 4G network. Or certainly a network, but no spectrum. Tele2 has since signed a deal with TeliaSonera to take over Norwegian operations of Tele2.

“In this area we see our role mainly as limiting the pain which changing regulation brings with it. But that can only be done if you know what changes are going to descend on the sector, and what the possible consequences will be.”

Field of competition changing

 

Who does Phadke regard as the most significant competitors in the Benelux and Europe? Five or six years ago it was parties like CapGemini, Atos and IBM, plus a number of other players. Now Phadke regards Accenture as the only player of significance which has the same breadth in its telecom sector portfolio limited to IT. Particularly in network services, companies like IBM, CapGemini and Logica have become much smaller in recent years. “We have built up a broader portfolio to be able to offer end-to-end service provision, from the transmission tower up to and including the datacenter to providing Big Data services. We are also looking at a broader range of developments, not fragmented.”

Tech Mahindra has grown strongly in the European telecom market in recent years, says Phadke. From a company with annual sales of 150 million euros and BT as its only client in 2004-05, over the past seven or eight years it has evolved to become a player with annual revenues of around 2.5 billion euros in telecom service provision, and operators and ISPs as clients in virtually every European country. “Perhaps we are a little too modest, because not many people are aware of all the things we do, or that only handful of players like Accenture are bigger than us in telecom service provision, with around 5 billion in annual revenues. You might say we are the best-kept secret in the telecom world. Extremely well-known in very restricted circles – among CIOs – but not outside them.”




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