VENDOR PROFILE TCS Business Process Services Enabling Operational Transformation in the Telecom Sector Mukesh Dialani Curtis Price IDC OPINION Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.com Over the past few years, there have been a number of trends in the telecommunications market that have put pressure on telecom service providers' operational models. The growth in mobile data, the decline in wireline voice revenue, and increased competition from cable and over-the-top players are some of the factors that have adversely impacted telecom service providers' operations. As telecom service providers develop strategies to address these and other challenges, it has become clear that their siloed operational models will not allow them to support current and future market dynamics in a cost-effective manner. Telecom service providers must take a holistic view of their operations and determine the changes needed to drive an increased level of operational efficiency while providing support for the following: An agile operational environment that is responsive to changing market dynamics An operational environment that supports a rapid time to market for new services and enables new business models A high-quality experience for businesses and consumers While investments are currently being made to achieve the items stated previously, IDC believes that other factors will come into play, such as the broad adoption of cloud technology, Big Data analytics, the rollout of new technologies (i.e., LTE), and the emergence of M2M, that will act as triggers to further accelerate operational transformation in order to realign telecom service providers' business to new market realities. IN THIS VENDOR PROFILE This IDC Vendor Profile outlines and evaluates the telecom business process services (BPS) provided by Tata Consultancy Services (TCS). Please note that IDC's taxonomy does not separately classify business process services and instead defines BPO, which is identical to what TCS refers to as BPS. The rest of this document refers to BPO as BPS. The BPS business information details as outlined in this document are provided by TCS, and the analysis is carried out by IDC based on IDC's view of key factors that will enable a telecom BPS provider to succeed in light of the current and emerging market trends. Additionally, this analysis is carried out in isolation and not compared with other telecom BPS providers. Filing Information: March 2014, IDC #244960, Volume: 1 Network Life-Cycle Services: Vendor Profile
SITUATION OVERVIEW Telecom Industry Key Trends The worldwide telecommunications service spending (fixed and wireless) is expected to reach $1.82 trillion by 2016. While revenue growth in segments of the market such as mobile data, IP voice, and fixed broadband is offsetting rapidly declining revenue in markets such as TDM voice, the explosion in mobile data growth has resulted in capex and opex increases as operators scramble to meet bandwidth demands. In addition, as fixed voice communications have become commoditized by alternative means of communications (e.g., VoIP, IM), operators are keen to bring their cost structure for fixed communications more in line with current revenue levels. These trends are forcing telecom providers to make structural changes to their business, and these changes will require a holistic view of their operations that stretches across various operational platforms. IDC believes that reevaluating existing business and system processes to determine where changes are needed will be the key foundation to operational transformation. According to IDC, other trends that will drive operational transformation are: Mobility. Devices and applications/content are driving user consumption patterns across numerous devices, platforms, and access network types. Given the current network economics around mobile data, telecom service providers' investment in infrastructure must be optimized. Cloud. The adoption of cloud-based services will be dependent on the underlying connectivity and the interrelationships between mobile operators, datacenter provision, and overall management systems. The addition of OSS/BSS and analytics of the enormous data generated across the multiple platforms represent a major opportunity for communications service providers positioning themselves in the new digitally connected world. Big Data analytics. Telecom service providers are in a great position to leverage the large quantity of data they have on their customers. Mining this data and making information more actionable will become an important source of differentiation in the market. While telecom service providers use analytics today, providing more contextual analytics by combining information like usage patterns, preference, and location will be key to delivering a high-level customer experience. M2M. Going forward, the success of telecom service providers will be tied to the ability to position themselves as an enabler of new business models. Providing M2M solutions in verticals such as healthcare, retail, and transportation gives operators the ability to drive revenue (beyond transport) to strategically important vertical markets. We are seeing the beginning stages of this new direction with offerings like fleet management services, but future opportunities will be much broader. End users of telecom industry's products and services are looking for: 2 #244960 2014 IDC
Personalization. End users are looking for products and services that are customized to their specific needs. Customer experience. Telecom providers have to invest in infrastructure and IP to build products and services that provide great customer experience. This is necessary not only to retain existing clients but to avoid and manage any negative sentiment on social media and any other customer experience channels as customers want to be heard and responded to, in (almost) real time. Speed to market. Customers want new products and services at a much faster pace and often there is very little differentiation. This necessitates the need to test, manufacture, and get telecom products and services to market at frequent intervals. To service these customers' needs, telecom providers are focusing on strategies that include: Building/using Big Data and analytics competencies. To understand and manage their customers better, telecom providers harness information using internal business data as well as large streams of external unstructured business data from social media to put in place "sense and respond" mechanisms that keep their customers happy and enable churn reduction. This enables telecom providers to take informed decisions and improve profits as well as bottom line. Partnerships. In those situations where telecom providers have gaps in capabilities, they are adopting hitherto unheard of strategies in the telecom industry partnering with other ecosystem entities to consolidate their position and build competencies to differentiate themselves. Business process reengineering/optimization. Given the revenue declines in the fixed networking business, these services will be critical to helping telecom service providers reduce operational costs. Company Overview TCS BPS Services History In the early 1970s, as TCS was growing, the company also undertook data entry and maintenance work. When Swissair chose to transition its processes to India. TCS partnered with Swissair to create Airline Financial Services (AFS) to deliver services to Swissair and other airlines. TCS had similar joint ventures (JVs) and subsidiaries such as Intelenet (voice services), WTI (engineering services), and BTS (insurance services), which provided BPS services and some of these were subsequently reverse merged with TCS. Additionally, TCS also acquired Citi's captive BPS in India, CGSL. TCS' domain expertise across industries allows the company to deliver industryspecific cost of goods sold processes core operations for the firm's customers. TCS can help its customers launch innovative new products, enter new markets, and improve the end-customer experience, thus assisting with its customer's initiatives to increase revenue. TCS' predictive and risk management analytics capability helps 2014 IDC #244960 3
customers be more agile to market demands. TCS' technology transformation approach FORE has helped customers achieve significant efficiencies and effectiveness. TCS has invested in building domain expertise, with occasional acquisitions (such as CGSL) to plug in the expertise gaps, combining this domain expertise with analytics skills to provide business insights to customers seeking agility and risk management, and creating platforms on which TCS can build and deliver BPaaS solutions, thereby assisting customers with preconfigured industry-standard processes. TCS' FORE transformation methodology, governance frameworks, and methodologies and tools in TRAPEZE focus on delivering experience certainty. TCS engages with various partners through COIN (Co-Innovation Network) to provide the most effective solutions to its customers. TCS Telecom BPS Credentials According to TCS, the Telecom Business Unit is its second-largest vertical contributing a high percentage to overall TCS revenue. TCS has a dedicated pool of professionals and an accumulated experience and ongoing associations with worldclass telecom service providers and equipment manufacturers. TCS assists wireline, wireless, broadband, and cable service providers redefine their markets with innovative solutions that help them become more agile, assist with reducing fixed operations costs, and introduce next-generation telecom services. TCS sets customers apart from their competitors with instant access to industry solutions, best-in-breed technology, assets, and frameworks. Company Strategy TCS Value Proposition According to TCS, telecom customers outsource their operations management systems needs as TCS can provide use cases where it went beyond service-level agreements (SLAs) and provided continuous process improvements that resulted in increased productivity and accuracy and improved its customers' operations. TCS attributes its telecom BPS business to the following: Understanding of etom. As a member of the Tele Management Forum (TMF), TCS conforms to the etom framework and provides offerings that are in sync with the key processes defined in the framework. Utility-based solution. TCS assists customers across specific domain areas that include end-to-end Hosted OSS/BSS (HOBS) solution, Remote Service Assurance and Management activities using Connected Device Management (CDM) Solutions, mobility-based solutions to assist field force and support staffs in their day-to-day tasks, and revenue assurance using Victory iras, which supports detection, correction, and prevention of revenue leakage. Global Network Delivery Model (GNDM). This provides the right mix of location, talent, and resources, strengthening TCS to provide quality services consistently, across the globe. 4 #244960 2014 IDC
IT-BPS synergy. TCS' solution strengths are derived primarily from strong IT- BPS synergies resulting in the automation of repetitive manual tasks and activities. These automations lead to improvements in Turn Around Time or Accuracy, which critically impacts the efficiencies and effectiveness of processes. Delivery excellence. TCS' investments in TRAPEZE suite of tools and assets provide the company's customers the advantage of managing their operations in a real-time environment even though miles away from them. These tools used and deployed throughout the engagement life cycle like business opportunity identification, transition, knowledge transfer, service delivery, and continual improvement program demonstrates TCS' commitment to deliver beyond commitments. TCS Telecom BPS Key Statistics Key statistics of TCS' telecom BPS include: Worldwide BPS revenue (2012 2013): $1.44 billion Telecom BPS revenue: $45 million Head count supporting telecom BPS business: Over 3,400 dedicated to telecom BPS Global customers: Over 20 Volume of transactions per year for telecom BPS: 62 million across the entire telecom BPS spectrum as highlighted in Figure 1 Figure 1 provides details regarding TCS' telecom BPS services. 2014 IDC #244960 5
FIGURE 1 TCS Telecom BPS Services Source: IDC, 2013 Sample Case Studies Optimized design and provisioning of high-capacity circuits. A leading U.S. telecom operator had to design high-capacity circuits, with reduced design cycle time and costs. The operator wanted to increase accuracy of design and, therefore, provisioning. TCS through IT-BPS synergy developed multiple tools to reduce manual intervention in the process, which completely automated the process and resulted in drastic reduction of FTEs. Using time zone differences, TCS provides its customers with 24 x 7 services, enabling reduced order accumulation. TCS also assists its customers by identifying critical problems early in the process to avoid rework and leverages automation to contain the cycle time. For example, TCS' telecom BPS solution brought in process improvements for a client, resulting in annual savings of $6 million on highcapacity circuit provisioning. Revenue assurance for a telecom company. A known U.S. telecom company was facing revenue leakages because of customers not getting billed, due to the huge mismatch between the local exchange carriers' (LECs') inventory details in provisioning and billing systems. There were also service fallouts and considerable customer dissatisfaction over delay in repairs. TCS was selected to help with revenue assurance. The scope of the engagement also included LEC inventory management and customer inventory application updation. TCS 6 #244960 2014 IDC
adopted a phased-transition approach to meet goals and completed the first phase in record time. TCS also developed a revenue assurance view tool and deployed it in the pilot phase itself, which reduced the turnaround time (TAT) from 40 minutes per record to 8 minutes per record and improved productivity per FTE by 233%. By enabling its client to bill previously unbilled customers, TCS helped customer recapture $1.3 million in two months' time. Billing operations support brings benefits. The United Kingdom's largest telecom service provider wanted support for managing its complete billing operations for services, which included wireline and data products for retail and enterprise customers. TCS partnered with the enterprise, reducing the cost of invoice generation and bringing down manual interventions through automation and process improvement. This partnership helped the enterprise speed up its billing process, develop tools internally to reduce manual intervention, and better monitor the service-level agreements. Along with process efficiencies, the customer benefited from tremendous savings and advanced revenue collection. Enhanced customer experience for an Australian telecom company. Australia's leading telecom service provider was struggling to optimize its business processes and enhance end-to-end customer experience. TCS' partnership with the enterprise enabled the company to automate workflow notification and optimize customer reach-out windows for effective resolution. Through its process reengineering and continuous improvements initiatives, TCS helped the customer avoid duplication of tasks and remove non-value-added activities, which has resulted in a savings of over A$15 million. Also, as a result of this partnership, the customer could improve its Net Promoter Score by 40% in seven months and reduce call handling time for all queues by 50%. Churn model for a telecom service provider in the United Kingdom. One of the leading fixed-line telecom service providers in the United Kingdom wanted to identify customers that have a higher propensity to churn due to bad debt, and it also wanted to develop profiles of low-, medium-, and high-risk customers based on the risk of churn. TCS helped the enterprise by developing a propensity to churn model using customer billing and lifestyle data. It has enabled the customer to identify some of the key variables that have significant influence in the churn rates. The model has captured about 70% of churn in top 3 deciles. TCS also provided customer profile and segmentation of the company's existing customers based on their risk of default using various data mining techniques. TCS Telecom BPS Strengths and Weaknesses Strengths Overall Scale and Global Network Delivery Model (GNDM) IT-BPS Synergies that enable TCS to develop differentiating services offering Analytics Infrastructure supporting the telecom BPS business 2014 IDC #244960 7
Focus on improving operational efficiencies and KPIs for its clients by leveraging platforms, automation tools, and TCS' delivery ecosystem Deep knowledge of Telecom OSS/BSS domain with strong consulting and integration capabilities to assist in the development of a transformation strategy Holistic view of enabling customer experience and service management across OSS/BSS functional areas Weaknesses Increased competition from network equipment providers (NEPs) as they move more aggressively into the telecom IT domain with a software- and servicescentric message Lack of comprehensive strategy for enabling telco cloud and Internet of Things (IoT) initiatives, which are key priorities for many telecom providers Limited presence for telecom BPS among leading telecom providers in the Americas region FUTURE OUTLOOK Analytics will be a key business value enabler for various lines of business within a telecom organization. IDC believes that driving operational efficiency will continue to be an area of emphasis for telecom providers for the foreseeable future. ESSENTIAL GUIDANCE Advice for TCS Success for TCS will depend on the company expanding its "sphere of influence" to line-of-business leaders in areas like customer service and marketing. As telecom providers continue to pursue customer experience management strategies, these groups will increasingly put pressure of IT to deliver solutions that help drive overall customer satisfaction. As such, there is an opportunity for TCS to drive thought leadership around this issue by highlighting existing reference accounts, the company's holistic view of telecom operational processes, and the breadth of TCS' solutions for addressing operational challenges. 8 #244960 2014 IDC
LEARN MORE Related Research Worldwide Outsourcing Services 2014 Top 10 Predictions (IDC #245942, January 2014) NSN Recommits to Managed Services (IDC #lcus24557614, December 2013) Alcatel-Lucent Pushes Forward with Managed Services (IDC #245050, December 2013) Worldwide Offshore Key Horizontal BPO Services 2013 2017 Forecast (IDC #244195, November 2013) Turnaround Almost Complete, NSN Plans on Expansion (IDC #CEMA20279, October 2013) WNS: Leveraging Analytics, Platforms, and Partnerships to Differentiate Its Finance and Accounting BPO Services Offerings (IDC #244010, October 2013) Business Process Outsourcing (BPO) Providers Aligning Big Data and Analytics Capabilities with Customer Buying Preferences and Expectations (IDC #244059, October 2013) Infosys Business Process Outsourcing Services: Enabling Customers to Transform and Adapt (IDC #241738, July 2013) Fractal Analytics: Using Big Data and Analytics Services to Enable Enterprises to Decode Their Multi-Dimension Complex Customers and Improve Customer Satisfaction and Business Performance (IDC #241153, June 2013) Worldwide and U.S. Business Process Outsourcing Services 2013 2017 Forecast: Time for Customers to Reap the Emerging Benefits of Transformative and Agile BPO Services (IDC #240860, May 2013) Worldwide Business Process Outsourcing Contracts Study: 2006 2011 (IDC #240742, April 2013) TCS Business Process Outsourcing Services: In Pursuit of Excellence (IDC #240274, April 2013) Worldwide Business Analytics Services 2013 2016 Forecast (IDC #240277, April 2013) Wireless Network Planning and Optimization Services Highlighted at Mobile World Congress (IDC #240498, April 2013) 2014 IDC #244960 9
How Is EXL Service Consolidating Its Business Process Outsourcing Services Offering Key Takeaways from a Recent Conversation (IDC #240073, March 2013) Meet Your New Boss: The Chief Executive Customer (IDC #239047, February 2013) Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2014 IDC. Reproduction is forbidden unless authorized. All rights reserved. 10 #244960 2014 IDC