Telecom Trends - The BSNL Story

Srinivasa U Rangan, Associate Professor, holds the Kingsbury Term Chair at the Asian Institute and Institute for Latin American Business at Babson. Rangan's research, teaching, and consulting focus on competitive strategy, joint ventures, strategic alliances, global competition, and national competitiveness. Recently he was at the ISB to conduct a GAMP programme on strategy. One of the participants present was Kuldeep Goyal, CMD, BSNL India’s largest telecommunication company.

CEE Emerge brought the two together in a post- programme discussion, where they shared views about opportunities and challenges of a telecom PSU, how BSNL beats competition at home and abroad, its stand on human capital, and finally some strategies on how to leverage on being a PSU.

Professor Srini Rangan - Let me begin by stating that I think in some respects you fall in a very fortunate position. BSNL is probably making a transition, from being a pure PSU into a more market responsive kind of organisation, you also have enormous strengths, you are sitting on a lot of cash, you have a significant installed base in terms of wire line and wireless , you have actually had the advantage of having to wrestle with tough domestic competition, and therefore have sharpened your abilities in terms of how to compete against private operators – all this within the uniqueness of a PSU. So when you want to globalise you may be able to exploit your strengths, leverage it much better, you can probably buy up companies, acquire them etc. What other opportunities do you foresee in terms of transferring knowledge and capabilities to other places? In the next five years what will be your strategic priorities?

Kuldeep Goyal - The Indian markets is going to be saturated in say the next five years or so. The growth will taper off significantly, and therefore operations outside is going to be really important. Mobile and mobile broadband will be very important for to get us into TV operations and the Wi-max. So indeed it is our experience that we can leverage on, while going international. We have started looking to bid for licenses wherever they opened up, but we hadn’t thought about acquisitions. After having discussions with you, I feel that it is one more option for faster growth and it helps in accelerating the learning processes.

Srini Rangan - In terms of organisational capabilities, you have a work force which is largely, what I would call, with a mind frame of the PSU operation. As you try to go abroad, or for that matter as you become more open, do you see this mind set as an impediment or an advantage?

Kuldeep Goyal - One set of our workforce is quite skilled. They have been through number of technologies which have been inducted in the telecom network. But yes, the majority of the work force is trained only in formal operations like call rectification, provisioning of connections etc. So a skilled work force is definitely useful for operations.

Srini Rangan - Are you already moving in the direction of lateral induction of highly competent managers and technical people?

Kuldeep Goyal - Right now the induction is at the entry level only. Lateral induction is still at a nascent stage, but we are seriously considering the same, especially in the fields of marketing and IT.

Srini Rangan - That takes me to the next question. Historically PSUs have not done any marketing. They have not even done selling, because they are pretty much monopolies. But now we are moving towards a different milieu. How has this transition of having to face competitors such as Bharti and others, caused you to move in the direction of creating and strengthening your marketing capabilities

Kuldeep Goyal - So far our focus has not been on marketing. What we have is a ‘pull marketing’ not a ‘push marketing’. Customer comes and then we service him. But now we have moved our focus of going out and reaching our customers. We are putting in place dedicated teams who will be exclusively in charge of sales. We plan to train 20 percent of our work force, in sales and marketing, and of course give them product expertise. We are engaging some marketing agencies on the job, and in fact we have a new brand ambassador actress Deepika Padukone. We are now heading towards ‘push marketing’.

Srini Rangan - PSUs have a difficult time motivating people. Essentially there is no compensation or incentive for performance, there are no systems which rewards performance. As you take on domestic competitors, and eventually go global, what are your plans in terms of how you want to move towards different incentive based performance measures and matrix, systems and processes?

Kuldeep Goyal - Right now we practice a system of incentive that is uniform. Even the productivity linked incentives are uniformed. I agree that this doesn’t induce a good worker to give more productivity. The PSU is governed by a PSU based committee. Recently the committee has come out with recommendations, where performance linked incentives have been suggested. In addition we plan to start some incentive scheme within the organisation. In fact we have already started a scheme where for every connection they provide, the field staff is eligible for some incentive.

Srini Rangan - If you look at all your competitors Bharti or Reliance - they have poached people from your organisation. You seem to be haemorrhaging talent. How are you going to stop that?

Kuldeep Goyal - This trend is primarily due to the compensation package difference which is unmatchable. But then if you look at the total attrition rate which has taken place, we have about 3 percent attrition. It is not much at the entry level but is more in the top and middle management. To counter this, what we do is have further recruitment. For a PSU these are the limitations. Do you have any suggestions about how to get over the curves and controls which often curtails our growth?

Srini Rangan - In India it is going to take quite a bit of effort and time for PSUs to make a transition into a market oriented, independent and shareholder responsible kind of organisation. You have to think of organizational processes, you have to think of organisational systems, you have to think of incentives, you have to change the people’s mindset, and how they are going to work, and you also have to think in terms of innovations, products and services which you are going to offer. The other thing you can do is strengthen your installed base. Here I am specifically thinking of corporate clients, large corporate clients to whom I am sure you are providing service. Remember your rivals are always trying to poach that. Have you thought of how you can try to retain the large corporate clients?

Kuldeep Goyal - We are trying to provide a complete network where all the services - wire line services, wireless services, broadband services – are given to them and they have only one agency to deal. It will also include services like video telephony, video conference, audio conference, etc. In fact we are also in the process of launching new services like third generation mobile services, and we will be the first to market it in the country. With that we hope to retain our corporate customers and high end residential customers.

Srini Rangan - Lot of questions answered. It was a pleasure talking to you Mr Goyal.

Kuldeep Goyal- Thank you very much. My pleasure.