New Delhi: India will play a crucial role in struggling telecom equipment vendor Nortel Networks Corp.’s efforts to restructure its business as it aims to trim costs by moving a majority of 1,000 jobs from countries such as the US and the UK to India by end-2009.
Nortel recently reported net losses of $957 million or Rs3,885 crore for 2007, with the net loss in the quarter ended December alone at $844 million. The company’s revenues for 2007 also shrunk to $10.95 billion from $11.42 billion the previous year.
In order to save costs and return to profitability, the Toronto-headed firm had said it will eliminate 2,100 jobs in the US and the UK and move an additional 1,000 jobs to low-cost, high-growth locations such as India, China and Mexico.
Reflecting change: Nortel Networks global services president Dietmar Wendt says the company plans to double the global services business in the next three-five years, with a significant portion coming from multimedia and contact centre services, adding that India is critical to grow the business. (Rajeev Dabral / Mint)
“Restructuring is a necessity in a highly competitive environment, and India is the hottest and the fastest growing marketplace for us. The largest percentage of the 1,000 people we plan to move to low-cost regions by 2009-end will come to India and will be in multimedia, including contact centre services, managed services and consulting areas,” said Dietmar Wendt, president of global services at Nortel, who was in India last week.
Nortel has 900-1,000 people currently working in India.
An analyst said the Nortel decision reflects changing market realities. “As the Asia-Pacific region is growing faster, they need to balance out their growth strategies. India is (among) the fastest growing countries in networking and communications around the world at higher double digit growth rates,” said Nareshchandra Singh, principal research analyst at tech research and advisory firm Gartner Inc.
Nortel is also moving key global positions to India. The company’s India managing director Ravi Chauhan was appointed global multimedia applications leader effective February, and will direct the global multimedia applications business from Bangalore.
“This is the first time we have moved development functions to India from North America. We also want to make India the global services headquarter for contact centre solutions and are currently scouting for an executive to head that business here,” said Wendt. “The highest demand for services is here. We will have that position filled up within six months.”
Nortel’s $2.1 billion global services business employs some 10,000 globally.
“India is an important market for us. We plan to double the global services business in the next three-five years and a significant portion will come from the multimedia and contact centre services business. Multimedia is a sea-changing event in our industry, and India is critical to grow that business,” Wendt added.
Nortel also plans to set up a multimedia network operations centre in India—its ninth worldwide—within the next 12 months that will manage, store, distribute and archive multimedia content, communication and video conferencing sessions for its customers.
“This will benefit anyone who takes multimedia services from Nortel. India can be served out of our Beijing center, but it (India) has the advantage of a good English speaking workforce that can manage even our customers in Australia and New Zealand,” said Srinivasan Thukkaram, director of global services at Nortel India.
Nortel has a network operations centre in Gurgaon that currently manages computer and phone networks.