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Tejas Preps Managed Services Launch

Light Reading
News Analysis
Light Reading
1/29/2010

Bangalore-based transport equipment vendor Tejas Networks India Ltd. is preparing to enter the managed services market in India, and is looking for the right customer opportunity to kick-start its operations.

"There are some customers who have come to us" to discuss the prospect of outsourcing their network operations, says Dr. Harmeet Singh, VP of International Business Development at Tejas, though he didn't identify any of those customers.

"Our local presence is a big advantage. It's an interesting business, and I think with the right customers and right business models, we will do that. You have to ensure that the customer has the right business model too, because it is shared revenue in most of the cases," Singh tells Light Reading.

Tejas would build any managed services offering around its core competency, transport, where it has developed a number of optical and Carrier Ethernet products that are used by many of the leading Indian operators. Not surprisingly, more than 50 percent of its revenues, which totaled 6.5 billion Indian rupees (US$141 million) in the fiscal year ending March 2009, are generated in the vendor's home market, with other deployments in the broader Asia/Pacific region. (See Dhaka TelePhone Backhauls With Tejas , Tejas Launches Carrier Ethernet Gear, and India's Tejas Joins PBT Club.)

The Indian vendor will face tough competition in the managed services sector, however. Industry giants such as Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. , and Nokia Networks , which have thousands of staff working in their professional services divisions, are already active in India, while even more direct competitors, such as ECI Telecom Ltd. , have already established managed services operations. (See Ericsson's Services Head Eyes More Growth, Huawei Plays Managed Service Catchup, AlcaLu, Bharti Form Joint Venture, Services Now 45% of NSN Revenues, and ECI Wins Managed Services Deal.)

And it's likely that any major transport network outsourcing deals, such as those being considered by Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Bharat Sanchar Nigam Ltd. (BSNL) , would go the way of those larger companies. Tejas will likely need to find a smaller project to get its foot in the managed services door. (See Major Outsourcing Up for Grabs.)

While it waits for the right managed services opportunity, Tejas is focused on developing platforms that will help carriers migrate toward IP-based networks. "Our focus is to build products that will allow customers to gracefully migrate their pure voice kind of network to hybrid voice and packet, and eventually to all IP," says Singh. (See Tejas Opens New R&D Site.)

The Indian transport market suffered during the past year, though, with Singh noting there was less capital expenditure on transport systems by the Indian carriers. The Tejas man, though, believes his company grew its market share, though he declined to provide any figures.

His view is backed up, at least for part of the year, by analyst firm Dell'Oro Group , which identified Tejas as one of the firms gaining optical market share during the early part of 2009. (See APAC Bucks Optical Trend.)

Singh also noted that Tejas, which has raised $73 million in five rounds of funding, is profitable, and is planning an IPO during the coming year. (See Tejas Pockets $24M Fifth Round.)

That's a familiar claim from the company, though, as Tejas has been talking to the media, including The Business Standard and The Hindu Business Line, about an imminent IPO for many years.

— Gagandeep Kaur, India Editor, Light Reading

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