Adopting an approach that has served computer giant IBM well, Ericsson intends aggressively to pursue more services projects in addition to selling its hardware products. Carl-Henric Svanberg, president and chief executive at Ericsson, said outsourcing was expected to be an attractive, cost-effective option for Asia-Pacific network operators planning to roll out third-generation (3G) cellular services. 'Ericsson is already the largest telecom services company in the world, with 15,000 service professionals in more than 140 countries,' Mr Svanberg said. 'We support networks that handle more than 550 million subscribers.' At a company-sponsored forum in Hong Kong last Wednesday, the Swedish telecommunications gear maker said operators were increasingly outsourcing activities, such as network deployment and operations, to cut costs, free resources and focus on subscriber requirements. Ericsson China president Mats Olsson said: 'We are discussing managed services with operators in Hong Kong and the mainland.' So far, Ericsson has implemented about 30 projects involving the design of 3G networks and 10 consultancy projects on 3G network strategy - all outside of China. Mr Svanberg said he did not expect mainland operators to embrace outsourcing as an option immediately, following the anticipated award of 3G spectrum licences in the mainland by the middle of next year. 'Our competition would continue to come from these operators' in-house resources, and they have a lot,' he said. Still, he noted that Ericsson's expertise in consulting, systems integration, managed services, network deployment and integration, education and support services would generate plenty of interest among telecommunications operators in Hong Kong and other Asia-Pacific markets. He acknowledged some similarities between Ericsson's focus on services requirements in its industry and IBM's accomplishments in the larger enterprise information technology services market. Ericsson's highest-profile managed services project with a Hong Kong-connected operator is a seven-year deal with Hutchison Telecommunications Australia. The operator, a subsidiary of the Hutchison Whampoa Group, has estimated cost benefits worth up to A$45 million (about HK$251 million) over seven years as Ericsson handles day-to-day operations of its paging, CDMA and W-CDMA networks. The largest Asia-Pacific managed services contract for Ericsson to date is a three-year, US$400 million deal signed in February with Bharti Tele-Ventures' Airtel cellular network in India. In the past 12 months, Ericsson has signed deals to manage more than 400 network building, expansion or migration projects for all major standards of mobile and fixed-line communications networks worldwide. Jacqueline Heng, Gartner principal analyst for services research, said: 'Global services providers are still educating the marketplace and, for some providers, this is starting to pay off. Enterprises in certain industries, such as telecommunications and finance, are becoming more sophisticated in their IT services demands.'
