Technology | Media | Telecommunications

Friday, February 01, 2013

Why Telecom Service Providers need Marketing Talent

According to the latest global market study by Ovum, telecom service providers must continue to focus on cost controls to offset relatively flat revenue growth over the next five years. That being said, a significant ongoing cost is the employment of their internal workforce.

Ovum believes telecom service providers may still have the potential to gain greater economies through their global telecom vendors -- in terms of network rollout, network operations, network optimization, customer experience and service quality management.

Ovum forecasts a 2 percent annual growth rate in telecom service provider revenues between 2012 and 2018, as these carriers struggle to combat increased over-the-top (OTT) service competition. Moreover, their customers seem more interested in buying devices or mobile apps than telco services, and they continue to resist usage-sensitive billing for internet access.

With little prospect of new revenue growth, Ovum anticipates that telecom service providers will attempt to further contain their capital expenditures (capex), but this is only part of the complex story.

"Service providers will keep a tight rein on their capex budgets, but they do need to spend heavily on technology -- both their customers and the competition demand this. What's changing is that operators are more smartly attacking their operating expense (opex) budgets, which opens new opportunities for vendors," says Matt Walker, principal network infrastructure analyst at Ovum.

Getting to the Core of the Apparent Problem

In order to take full advantage of this professional services revenue opportunity, it's crucial that vendors have a true understanding of telecom service provider opex challenges. That's something which has been complicated by the lack of granularity and consistency in financial reporting, amongst other known barriers to progress.

Ovum's newly created taxonomy of opex segments across all telecom service providers reveals that network or IT operations account on average for 18 percent of their operating costs, of which 60 percent ($126 billion) is for spending internally -- mostly using high-cost salaried staff.

"If you're an operator, this is a huge cost that needs to be managed," says Walker. "As operators look to lower operating risks and their cost bases, one option is additional services projects that involve the transfer of employees."

However, to meet the service provider current needs, telecom vendors will have to offer different professional service solutions than in the past. Why the shift in staffing requirements? It's because telecom service providers need help monetizing their networks and retaining customers, not just deploying the equipment.

Meaning, the most pressing business challenges are marketing-related, not technical. Besides, you can't transfer skilled marketing talent to a telecom vendor if you don't already employ those people.

Therefore, forward-thinking telecom vendors must demonstrate that they have the skilled marketing professional services talent available on their team, or that they can contract savvy marketers with proven telecom domain expertise when and where they're needed.

Furthermore, once telecom service providers realize that they can't cost-cut their way to increased revenue and improved profit margins, then the demand for professional marketing staff will likely accelerate. But here's the showstopper -- that qualified marketer talent is clearly in short supply.