Peter Ford Issue: India 2004
Article no.: 11
Topic: Digital India – The underwater connection
Author: Peter Ford
Title: CEO
Organisation: Global Marine Systems Limited
PDF size: 56KB

About author

Peter Ford is the CEO of Global Marine Systems Limited, a provider of submarine fibre optic cable installation and maintenance services. Mr Ford is an experienced business manager having been Managing Director or CEO of numerous companies in many sectors for over 15 years. His background is telecommunications begun with BT during privatisation in the 1980s. Mr Ford later worked within the sector with a number of private organisations. Mr Ford is the chairman of a specialist data centre fit-out company Waterfields, which has built over 500,000sq ft of space occupied by the world’s leading telcos.

Article abstract

India’s success providing outsourced services worldwide has shown that, with education and commitment, developing nations can conquer international markets. The growth of international connectivity is crucial to continue India’s international commercial success. Satellites and submarine cables can carry the traffic, but cables, historically, have been too expensive and satellites do not have sufficient capacity. New technology, though, has reduced the cost of submarine systems and developing countries can now afford regional systems to compete against the developed countries in global markets.

Full Article

National success on a regional scale The success of India in developing and providing outsourced customer service facilities to major corporations outside its borders has been nothing short of remarkable. India’s ability to provide highly educated, technically aware representatives to a broad range of companies has shown that with the right education and a national and regional commitment to development, developing nations can enter the international market place in areas where little previous experience. Measuring India’s success in outsourced services, the numbers speak for themselves. By 2008, an estimated US$70-80 billion in software and services earnings will contribute 30 per cent of all foreign exchange inflows, an increase from 8 per cent in 2002. By 2008, this sector alone will provide two million service jobs and an additional two million jobs in the parallel support services sectors. The growth opportunities for this service sector are as impressive as its performance to date. Considering the abilities of India’s established service industry, several future challenges can be seen: √ Tap new service lines As off shoring gains acceptance in mainstream IT markets, Indian IT companies will penetrate new service lines such as packaged software support and installation; IT consulting; network infrastructure management; systems integration; IS outsourcing; IT training and education; hardware support and installation; and network consulting. √ Focus on under penetrated geographies Established markets have been tapped, but large non-English speaking markets in Japan and Western Europe, with a $5-6 billion export potential, have not been reached. Also, English-speaking regions such as Canada, Netherlands, Sweden and Australia, account for 6.7 per cent of the world’s IT spending and represent an opportunity of US$ 1.2 billion by 2008. √ Target high potential verticals Three key verticals (financial services, telecom and manufacturing) account for nearly 45 per cent of today’s revenues. Indian companies need to target verticals like retail, telecom service providers and healthcare for their next wave of growth. √ Tapping Product Centric Opportunities India has established strong credentials in the IT services, but has only the 0.2 per cent of the US$ 180 billion software products market. Greater opportunities, though, are opening in areas such as embedded software; development and delivery of specialised components; offshore product development opportunities; product acquisition and enhancement and development of shrink-wrapped products. India’s economic development is having a massive social impact. India’s middle class population has doubled in the past 10 years from 150 to 300 million. With an upper class of 10 million, the hunger for hi-tech commodities such as personal computers, Internet access, international TV channels, information, and entertainment has made telecommunications access a basic requirement in India. India’s great investment in education has been crucial to its success. Statistics from a 2003 census substantiate a major success story in modern education: √ 9.2 million education students in 2002-03 versus 7.26 million in 1997-98; √ 1,265 degree granting engineering colleges; √ 1,034 Additional colleges providing Master of Computer Applications; √ 958 Additional Management colleges offering MBAs. Despite the investment in people, colleges and industry, advances such as those seen in India, are only possible with a solid underlying telecommunications infrastructure. Growth of this infrastructure is crucial to both the commercial and social development of the country. Removing the gap between the international ‘have’ and ‘have nots’ Historically, the options for providing India’s telecommunications enabling infrastructures would have been either satellite services or submarine cable infrastructure. Traditionally, the cost of submarine cable technology would have eliminated it as an option for a country, like India, trying to enter the international market. Until the mid 1990s, a consortium of telecom operators built international submarine cable systems by sharing the entire cost of the system. The consortium then restricted direct access to the system for themselves. Consequently, the cost of international access for countries or operators not involved in the system was high. As a result, developing countries often resorted to cheaper satellite technology. The satellite is a valuable asset in countries, such as India, where the rapid deployment of internal network and services infrastructure is vital. Nevertheless, satellites alone cannot economically provide sufficient capacity to meet the massive information, entertainment, and transaction-based capacity needs of India or similar countries or regions. The high cost of submarine systems and capacity restrictions of satellite technology has restricted regional and national development in many parts of the world. In contrast, developed countries and carriers have huge capacity submarine cable systems in service and have constructed a number of high capacity ‘highways’ to connect the major economic centres throughout the world. During the 1990s, when many major international submarine cables were constructed, there was no way to economically deploy smaller, regional ‘slip roads’ onto the ‘highways’ to enable smaller developing regions to benefit from the lower, proportional, cost of these huge systems. So, whilst the established economies thrived, the developing ones were prevented from doing so and the information and technology gaps widened. During the mid 1990s, one exception to this rule in the international submarine cable industry was the Fibre optic Link Around the Globe (FLAG). FLAG was one of the first regionally based cable systems in the world. India, taking advantage of the booming international telecommunications market, joined FLAG – the first private submarine cable system. Although not able to meet India’s needs today, the FLAG system provided the international access that India needed to meet its development needs. The increase in India’s, and the region’s, telecommunications needs has prompted the construction of a second FLAG submarine system to increase the region’s international connectivity. The impact of such regional submarine projects upon the development of the countries involved in the program cannot be overstated. Eliminating the cost of third party access to high capacity has enabled India and similar regions to benefit commercially and socially from lower cost international telecommunications. Aside from enabling India’s commerce and industry to compete internationally on a level playing field, economic and social expectations are raised by the ability to provide products and services such as the following: √ Digital television for international news and entertainment; √ High capacity broadband Internet access; √ High quality remote learning facilities in conjunction with international partners. Until quite recently, the construction techniques and available technology made submarine cable systems extremely expensive to implement and operate. Recent developments, including innovative methods of laying cables on and under the ocean bed, and improvements in the technology used to provide the huge capacity these systems require, have greatly reduced the cost of regional submarine networks. Smaller operators, new entrants and even regional development agencies can now contemplate building and operating their own regional submarine networks. India’s growing success is not just a one-time event. India will not only export high quality, high technology, products and services, but also their expertise in regional development to Africa, the Middle East, South America, the Caribbean and other parts of the globe as, over the coming years, its web of regional submarine ‘slip roads’ spreads ever wider.