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Ericsson sees growth in managed services
By Liu Baijia (China Daily)
Updated: 2004-07-19 09:25
Enterprise telecommunication outsourcing will become one of the fastest
growing businesses for Swedish telecommunications equipment giant Ericsson, said
a company executive.
Peter Ditmar Hofman, general manager of the professional services unit of
Beijing Ericsson Communication Systems Co Ltd (BEC), said that managed services,
namely telecom service outsourcing, will account for 40 to 50 per cent of the
firm's business, one of the two major manufacturing facilities of Ericsson in
China, in three years.
It is estimated that managed services will contribute to 12 per cent of the
company's total business this year.
Hofman said there has been a rising trend among companies to outsource their
organizations' telephone services to professional service providers.
As every industry in China becomes increasingly competitive, especially after
the country's accession to the World Trade Organization in 2001, companies are
focusing more on their core business, with outsourcing becoming increasingly
popular.
Huge demand will soon exist for enterprise telephone outsourcing business, as
many Chinese companies still use telephone equipment purchased 10 years ago and
they may have to replace the equipment soon.
Ericsson China, which has outsourced all its telephone services to BEC, is
estimated to cut the monthly cost of its telephone system by almost two-thirds
from 1.56 million yuan (US$188,000) to 553,000 yuan (US$67,000), while it does
not have to establish a special maintenance team, but always uses the latest
equipment.
According to Hofman, his company will target all industries in China, but the
service sector may be a priority in the near future.
Last summer, BEC was approved by the State Administration for Industry and
Commerce to become the first company to engage in enterprise telecommunication
outsourcing in China.
Ericsson China is BEC's first customer in China, but Hofman said its position
as the biggest will be taken by another client soon.
It also signed a contract with Scandinavian Airlines and operates two service
centres for the aviation company.
Plaza Asia, a professional business plaza management company based in Hong
Kong, is BEC's third customer. The two sides signed a three-year contract under
which BEC will provide enterprise telecommunication service for its branches in
Hong Kong and on the Chinese mainland.
Hofman said BEC is currently negotiating with 12 companies on enterprise
telecommunication services.
The Ericsson subsidiary will also work with some local leasing firms to
provide financial assistance to customers.
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