'India is a critical source of innovation for us'

British Telecom (BT) is driving what it calls "open innovation" and Matt Bross, the chief technology officer of BT, has been at the helm of it. Innovations that are centred around customer services and developed as inter-operable platforms are the company's backbone today. Bross spoke to Priyanka Joshi about the company's plans for 2008.

BT's approach to developing new technology and creating products and services has shifted gears since you joined. How has it benefited the company?

When you are a company of the size and scale like BT, developing technologies means doing it mainly in-house. We altered the company's mantra, and today research and development is more of an open innovation "" a process of developing technology using a combination of in-house research and R&D from outside organisations.

I would say that our approach has paid dividends which has evolved from a company burdened with a debt mountain of around $61.1 billion in 2001 to become one of the UK's most successful telecom and technology companies, with the first quarter results up to June 30, 2007, reporting a pre-tax profit of $1.34 billion.

So, which services can be termed as the key moneymakers for BT (India)?

BT in India focuses on delivering global services that support the needs and requirements of our multi-site corporate customers and Indian multinationals. It provides market access into India through a unique network which is connected to BT's comprehensive global network via Asia Pacific, Europe and North America.

Innovation must take place "at the speed of people's lives" is what you preach at BT. How do you practice it?

By believing that innovation comes from the BT staff, its business partners are collaborating with the universities and vendors worldwide which includes a team of technology scouts looking for promising technologies that can support BT's service vision. This way, the company does not have to invent everything itself. It is about how BT is helping people where they live, work and play.

BT spends about $2.25 billion on R&D a year, which is about 3 per cent of its annual revenue and this is a major driver behind the company's growth.

This level of R&D focus also encourages companies to take contracts with BT, partly because of the expectation that it will be able to provide them with the latest innovations as soon as they come into the market.

So, a renewed focus on open innovation has improved BT's balance sheets?

Exactly, in the last three years the global business has signed up new contracts totaling more than $40 billion and one of the things underlining the new contracts is that companies will not only get a solution from BT today, but they will also benefit from the innovations we develop during the term of their contract.

Further, BT now allows outside organisations to observe its R&D projects that are underway in our labs via a special website. If an outside company sees some research or technology in progress that it can adapt for its own services, they are free to buy it from BT.

We have taken technologies that could have languished within BT and put them outside, brought in venture capitalists, management teams and launched nine companies outside of BT over the last three years.

How does this ideology work in markets like India?

There are great ideas coming out of China, India, Latin America and other Asian countries. We are trying to explore opportunities wherever they exist and fuse them together to bring together the best thinking in the world.

BT accounts for 2 per cent of India's booming IT and BPO exports and the idea is to source more over the years. We typically spend $500 million annually in India, and so India is a critical source of innovation for us. BT (Asia-Pacific) already employs 20,000 people (working directly or indirectly), most of whom are in India. We will also add 6,000 people in India by 2008.