The Finnish mobile phone giant said it expects to grow revenues from its integrated services operation from about a quarter of the current total of network sales to about a third. The new business unit began operations on January 1st.
This means Nokia’s services offerings currently generate in the region of $625m per quarter. In the company’s fourth quarter 2004, released last week, Nokia Networks sales reached 1,906m euros ($2,486m), 21% of total.
Bosco Novak, the newly installed senior vice president of services with Nokia Networks, said the company is actively recruiting in key areas of systems integration, including technical consulting, IP consultants, operational support systems and service management.
Nokia’s services interests lie in three main areas: the radio access network, the core network and the service platform and application servers. While Nokia’s capabilities in service platform and application servers might reasonably be expected to lag those of SI giants such as IBM Global Services and EDS Nokia can reasonably claim to have market-leading expertise in the first two areas.
Novak estimated the global market for mobile operator-related professional services at around $35bn annually, $23bn of which is telecoms related. Much of this is still performed in-house but it doesn’t have to stay there, said Novak.
Novak said many mobile operators remain either unconcerned or unaware of the cost savings to be had by outsourcing aspects of their network function. Some operators have 10 people to support 500 base stations while others have 90, he said.
Outsourcing could also help mobile operators address key operational issues such as customer churn, added Novak. Service quality is important. A one to two percent improvement is a lot. It helps increase customer loyalty.
Full outsourcing-type arrangements, potentially with Nokia taking ownership of mobile operator networks, may happen in future, Novak said. However, he expects such developments to take time.
The IT industry took a long time to sort out [its attitude to outsourcing] but I’d expect to see it happen within the next two years. It’s different from IT as a lot of the competitiveness [of mobile operators] is in the design of the network.
After many quarters of underperformance, Nokia Networks is now once again building momentum. And services looks set to be a strong growth engine of the division.
Nokia can already claim mobile operators such as E-Plus, Telia Sonera, Vodafone, T-Mobile and Telekom Austria among its services customers.
