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Tech Mahindra’s new strategy is aimed at enabling operators’ NFV/SDN and digital transformations

Anil Rao Principal Analyst, Research

"Tech Mahindra’s strategy announcement makes clear that it is committed to helping its CSP customers succeed in the new digital economy."

NFV/SDN strategy banner

Analysys Mason attended the Tech Mahindra Network Services Conclave held at The Hague on 9 November 2016, where the company announced a comprehensive strategy to enable communications service providers’ (CSPs) network transformation initiatives. New initiatives, such as Virtual Network Function (VNF) Exchange, CloudCPE and MANO, position Tech Mahindra as a ‘prime integrator’ for deploying and operationalising network function virtualisation (NFV) and software-defined networking (SDN). This article presents a detailed analysis of the company’s strategy.

Tech Mahindra’s new strategy for virtualisation and digital transformation is comprehensive

Figure 1: Tech Mahindra’s new ‘RUN better, CHANGE faster, GROW greater’ strategy for CSPs

Tech Mahindra’s new ‘RUN better, CHANGE faster, GROW greater’ strategy for CSPs

Tech Mahindra’s Communications business unit is driving the company’s NFV/SDN strategy. This business unit has more than 7500 employees and a presence in more than 60 countries. Its customers include Tier 1 CSPs, such as AT&T, BT, KPN, Telus and Verizon. Tech Mahindra’s theme for the strategy – ‘RUN better, CHANGE faster, GROW greater’ – characterises the company’s three-pronged approach to addressing CSPs’ transformation needs. The strategy also demonstrates the company’s intention to exploit the opportunities presented by the introduction of NFV/SDN in telecoms networks. The company plans to move up the value chain to higher-value activities, such as business consulting, managed network transformation and digital services enablement.

‘RUN better’ plays to Tech Mahindra’s traditional strengths in improving processes

The ‘RUN better’ strategy aims to improve processes around network operations, maintenance, design, migration and implementation for CSPs. The core of this strategy is to improve operational efficiency and reduce opex associated with network roll-out and operations. This strategy follows from Tech Mahindra’s previous aims and aligns with the company’s traditional strengths.

We estimate that Tech Mahindra is the twelfth-largest vendor by revenue (for products, product-related services and professional services) in the worldwide telecoms software market, which has an overall value of around USD75 billion.1 It is the fifth-largest vendor by revenue in professional services for the fault management sub-segment of the telecoms software service assurance market. It is also the sixth-largest vendor by revenue in professional services for the performance monitoring sub-segment of the same market. We expect Tech Mahindra to execute its ‘RUN better’ strategy successfully, given this strong track record and its past success in building a strong, cost-focussed outsourcing business.

However, a key factor in the success of Tech Mahindra’s ‘RUN better’ strategy will be its effectiveness in reducing business costs. This can be accomplished by embedding automation and advanced analytics paradigms (such as analytics-driven predictive maintenance and machine learning) in the network operations centre (NOC) and other engineering, design and operational processes. The acquisition of Lightbridge Communications Corporation (LCC), completed in 2015, will provide a boost to the ‘RUN better’ strategy.

‘CHANGE faster’: a timely move to enable new networking technologies for CSPs

The ‘CHANGE faster’ initiative is a new strategic pillar of Tech Mahindra’s communications business. It aims to enable CSPs’ transitions to next-generation, software-controlled networking technologies, such as SDN, NFV, cloud, cloud RAN, 5G and multi-access edge computing (MEC). Tech Mahindra is offering high-value consulting and managed network-transformation services as part of this strategy, and is also developing new platforms and strategic partnerships with key VNF vendors. The company has made some significant announcements to underline its commitment to this strategy.

VNF Exchange

Tech Mahindra has launched a comprehensive platform for testing, verifying, benchmarking and certifying vendor VNFs – VNF Exchange. This move propels Tech Mahindra into a segment dominated by network equipment providers (NEPs), such as Ciena, Ericsson, Huawei and Nokia, and other large ecosystem leaders, such as Amdocs, Hewlett Packard Enterprise and NEC/Netcracker. However, a key differentiator for Tech Mahindra is the truly independent nature of VNF Exchange. The company does not own any of the associated NFV technology, such as the NFV infrastructure, the VNF manager or the VNFs themselves. Tech Mahindra is using tools from Ixiacom and Spirent for testing, and has over 40 VNFs tested and verified on the platform.

CloudCPE

CloudCPE is a white-label, universal CPE solution coupled with cloud infrastructure services that Tech Mahindra has built with its partners, including Affirmed Networks, Brocade, GENBAND, Intel, RAD and Red Hat. CloudCPE uses commercial x86-based hardware and comes packaged with pre-certified VNFs from Affirmed Networks, Brocade and Juniper. It has the ability to onboard both open-source VNFs and those from original equipment manufacturers (OEMs).

Tech Mahindra is driving an integrated services approach for CSPs’ enterprise customers with CloudCPE. Other OEMs (such as ADVA, Cisco and Juniper) provide vCPE solutions, but the key competitive differentiator of Tech Mahindra’s CloudCPE solution is that it provides a truly end-to-end managed solution, including cloud infrastructure for the universal CPE, edge appliances, deployment, ongoing operations and service management.

MANO

Tech Mahindra has also announced that it will be launching its own open-source-based NFV MANO solution. It is too early to speculate on the success of the offering, but Tech Mahindra is entering an already crowded market and will face intense competition from established vendors and ecosystem leaders.

‘GROW greater’ will generate new revenue from launching digital services

The ‘GROW greater’ initiative aims to enable CSPs to generate new revenue by launching new digital services, including IoT-based and ‘smart’ services (for example, smart cities, smart healthcare and smart homes). Most industry verticals will be disrupted by hyperconnectivity. Tech Mahindra’s wide expertise (which covers many of these verticals), combined with its deep knowledge of telecoms, strongly positions the company to enable CSPs’ digital transformations.

Tech Mahindra is committed to enabling CSPs’ digital transformations

Tech Mahindra’s new strategy is comprehensive and ambitious. It draws upon the company’s deep expertise in the telecoms professional services market, as demonstrated by its top-10 position in our rankings for the service assurance market. The ‘RUN better’ strategy, in particular, is well-aligned with Tech Mahindra’s strengths, but its success will depend upon the company’s ability to reduce CSPs’ costs through automation and analytics. The launch of VNF Exchange and CloudCPE are timely, and position the company well to enable new NFV/SDN technologies for CSPs as part of its ‘CHANGE faster’ initiative. However, Tech Mahindra may face strong competition for parts of this market, such as NFV MANO solutions. Nevertheless, Tech Mahindra’s strategy announcement makes clear that it is committed to helping its CSP customers succeed in the new digital economy.


1 Further details of vendors’ rankings in the worldwide telecoms software market will be provided in Analysys Mason’s forthcoming Report Telecoms software: worldwide market shares 2015.