Niru Mehta, Vice Chairman, Tata Telecom: The computer engineer shows how he retooled the box seller

Early november this year, call center executives of a foreign airline landed up at Tata Telecom's (TTL) headquarters in Gurgaon, near Delhi. They had a situation. The company had three contact centres-one each in the US, Australia, and Ireland-and wanted to outsource 200-seat workload to a location in India. The idea was not just to shift some back-office business to India, but to create a disaster recovery site. But here was the tricky thing: the calls to the three centres had to be redirected under different circumstances. For example, the US call centre wanted only the overload and after-business-hours calls to be sent to India, whereas the others wanted every alternate call they received to be pushed to an agent in India. At the same time, the airline did not want its customers to wait for more than three or four rings before the call got answered. So, the automatic call distributors (ACDs) had to figure out, typically, in less than three seconds the best agent (in terms of promptness and cost-effectiveness) before assigning the call. Programming the stuff required complex algorithm. Could TTL do it?

For an answer, TTL's technical support team took the call centre honchos to their first-floor lab in Gurgaon. In the L-shaped room, the TTL technicians rigged up the required switches and ACDs and actually simulated how the thing would work in real life. It's a deal worth about $1 million (Rs 4.9 crore), and TTL is already working on its implementation. Even four years ago, the company would have had to ask its customers like the foreign airline to take it for its word. A proof of concept would not have been possible.

But then, TTL is not what it was four years ago, and the Rs 12-crore simulation centre is just one example of how the company's Vice Chairman Niranjan 'Niru' Mehta has transformed a money-losing EPABX manufacturer into a profitable market leader, with a wide range of enterprise solutions-from basic telephony to IP solutions, messaging to call centre solutions. In that time, Mehta has upped revenues from Rs 175 crore to Rs 263 crore, and turned losses of Rs 19.64 crore into pre-tax profits of Rs 24 crore last year-with no equity infusion from the JV partners, the Tatas and Avaya Inc. of the US. Says the 46-year-old Mehta, a computer engineer from New York's Rensselaer Polytechnic: "The telecom landscape has changed so rapidly that had we stuck to boxes, we'd be deep in losses."

The Reinvention

But how did a technology man land up in the management hot seat? Blame it on a conspiracy of circumstances. For 15 long years, Mehta tinkered around in Bell Labs in the US, developing cutting edge telecom gear, including the popular Definity enterprise communications server. In the mid-90s, he joined Lucent's (post spin-off from AT&T, Bell Labs became Lucent's R&D arm) management team and was roped in to structure the India partnership. In 1997, he moved to India as the Managing Director of Lucent's Enterprise Network business (renamed Avaya in October 2000) and the Chief Technology Officer of TTL. But it wasn't until 1998 that Mehta expanded his role at the joint venture to include sales and marketing, and by 2000 to being the vice chairman.

One of the first things that Mehta noticed in his new avatar as the marketing honcho was the disconnect between what the customers wanted and what TTL had to offer. The reason, of course, was that the market itself was changing. Import duties on telecom equipment were being slashed year after year, and that meant domestic manufacturers would soon have no price protection. The internet and the developments in information technology were beginning to transform electronic communication into a business transformation tool. Therefore, plain vanilla voice solutions no longer satisfied customers. Also, MNC competitors were raising the bar for local players like TTL. Says Mehta, who's also MD and VP of Avaya India, but spends 90 per cent of his time on TTL: "It was obvious that continuing with (the old) model was not viable in the long term."

The question staring Mehta in the face was an obvious one: What to do next? As Mehta and his a-team put their heads together, it struck them that customers preferred one vendor over another for one of the three reasons: a) price leadership, b) technology leadership, or c) superior customer service (in a broader sense). As a joint venture that depended on its foreign partner for the technology, TTL could neither be a nor b; it had to be c. While the choice was easy to make, following through on it wasn't. For one, as Mehta discovered to his horror meeting customers, no one in TTL seemed to "own" its customers. Sales, marketing and customer service worked in different silos, with no one function meeting all the customer requirements. Says Sunil Gambhir, coo and a 15-year TTL veteran: "That model was relevant when we were selling boxes. But moving to solutions meant we had to both empower and reskill our front-end."

Customer First

As Mehta finished doing his initial rounds of customers, he realised that two broad things needed to do be done at the company. One, it had to exit low-end manufacturing and introduce state-of-the art equipment from Lucent/Avaya. Two, to be able to understand the customer's business and recommend suitable telecom solutions, TTL needed to change the way it interfaced with the customers.

Therefore, in 1999, TTL stopped manufacturing low-end, plain vanilla telecom hardware from Oki (a Japanese company), and introduced the Lucent/Avaya range. It expanded the voice portfolio to include various messaging, teleconferencing solutions, and eventually gear for contact centres. Where Avaya did not have offerings, TTL tapped other vendors like, recently, Nice of Israel for digital recording solutions. Says Ajit Thatte, VP (Marketing) and Strategic Alliances, TTL: "In this industry you can't be the lone ranger and deliver customer value."

In 2001, the company sold the loss-making Tatafone business, which primarily manufactured telephone instruments, to Tata Industries and received Rs 18.50 crore as compensation. At one stroke, that turned losses of Rs 5.25 crore in 1999-2000 into profits of Rs 13.13 crore the following year. Last year, the company raked in net profits of Rs 15.68 crore.

Meanwhile, teaching the rank and file of TTL to be "customer responsive" was proving to be more difficult. Mehta had identified 20 executives who would form the bedrock of tier two leadership. An immediate fallout of the organisational changes was the exit of some top directors. As they saw it, the power was shifting from traditional corporate centres to people down the line. "I don't think (the rationale for change) was understood or appreciated by those people," says Mehta.

Having identified new leaders, the thing to do was to demolish the old silos and create a cross-functional structure that allowed the organisation to view the customer as one. The new rallying slogan: "Winning Through Customer Responsiveness" (Mehta recently launched an industry forum to spread the movement). Two years ago, the erstwhile sales and service teams were regrouped into cross-functional account management teams (amts). The country, which had earlier been divided into four market regions, was split into six, with Mumbai and Bangalore as two new regions. Customers were categorised-in metros by industry and in other places by geography.

Each amt is supported by an expert team of 30 headed by cto Harish Khanna that gets in on the sales pitch early on. An ERP system allows the amts to track deals right from the discovery stage. TTL is now investing about Rs 12 crore in a CRM solution that will integrate its channel partners with its own information system. More decision-making power to the amts and greater technical support are helping close deals earlier. For example, three years ago it would take anywhere between 95 to 105 days to close an order from the time it was received. Today, that process is completed in between 61 and 75 days. Says Anil Nair, Director (National Sales), TTL: "We don't have any organisational barriers in between any more, and that's helping us respond faster to customer needs." Adds Hari Rao, Manager (Network Services), Standard Chartered, a TTL customer: "One advantage with Tata Telecom is that we can directly approach the top management if there's any problem."

The results have come at a cost. According to TTL's Director (People Excellence, or hr), B.N. Jha, 100 per cent of its staff of 540 is trained every year. That translates into six to seven mandays of training on soft skills alone. Khanna, the CTO, says that in the near term the company will spend Rs 3-4 crore on training and training equipment, and Avaya certify its customer facing associates (read: employees). A new programme based on three-tier skill matrix has also been launched, for which 120 associates have already enrolled. By 2004, the number should go up to 300. Says Jha: "Encouraging people to take decisions means that we have to equip them suitably."

Not surprisingly, employee productivity is clipping. Last year, it rose some 30 per cent and the year before by a staggering 67 per cent. That's helped push revenues to Rs 263 crore from Rs 234 crore in 2000-01. A big reason for the growth is the quick expansion of product offerings and investment in facilities like the simulation centre, which-Khanna claims-is the only one of its kind in India. Market share is dominant, too. In the call centre business, TTL claims to have a 60 per cent share, and more than 40 per cent in voice solutions. Apparently, not without reason. Points out Anil Khosla, Vice President (Marketing & Sales), Alcatel: "Lately (TTL) has become quite aggressive, and it has also broadened its horizon."

In the years to come, Mehta wants to do more of that. Among other things, he wants to consolidate market share in the call centre segment, expand end-to-end solutions capabilities, and continue to grow the business-through acquisitions, if need be. Says Mehta: "We have to focus more and more on differentiating ourselves from our competitors." As long as Avaya stands by TTL, delivering on that shouldn't be too difficult.