Nortel to up sourcing from India

Nortel Networks, the $10.5 billion global networking equipment provider, is in the process of increasing its sourcing from India. The company, with a wide ranging activities in sourcing design and R&D services from India, both from vendors and from its own captive centre, is now looking at India for expanding its manufacturing through original equipment manufacturers (OEMs). Nortel is also scouting for third-party BPO service providers to shift work to India.

"We expect to source more products from the manufacturing service providers in India that will not only add value and velocity to our growth, but also offer us a competitive cost advantage and time to market," John B Haydon, chief procurement officer, Nortel, told Business Standard. Currently Nortel sources base stations and switches from Flextronics and Solectron in India.

Nortel works with Wipro, TCS, Infosys and Sasken for its software and design requirements. Haydon said Nortel follows a hybrid model which focuses in sourcing as well as outsourcing. "India is a significant market for Nortel in terms of sourcing in areas of design service, manufacturing services, network services and business process outsourcing services." he added.

He said India was pretty good for procuring products like diesel generators, towers, antennas from the OEMs. Haydon said as Chennai was heading to become India's manufacturing hub, Nortel was planning to move more manufacturing works to be done through the OEMs based out of there.

Nortel spends approximately $ 7 billion annually towards procuring services and products from its partners. Recognising the potential of India as a sourcing base, Nortel has established an international procurement office in Delhi last year. This is one of the four procurement offices being run by the company worldwide, the other three being in Eastern Europe, Mexico and China.

Haydon said despite having its own development centre in Bangalore, Nortel would continue to work with R&D services providers. "We are a strong R&D focused company having 13 research labs worldwide and our annual spend on R&D is about $ 1.9 billion. Besides, there is a clear line between our own R&D and what we procure from the service providers. We will continue to leverage more services from our partners in India, to gain competitive advantage in many niche areas," he added.

Apart from being one of the sourcing hubs, India also promises a lot of opportunities for the company as a market, especially for its wireless communication technology. Recently, the Indian Railways has chosen to use Nortel GSM-R Network, a wireless railway communications technology, to improve the safety and efficiency on the busiest rail artery in Uttar Pradesh. This is the second such contract for the company in India, after it was chosen by the Railways to provide GSM-R solution to the Eastern Railway in West Bengal.

The network will provide wireless communications along the 751 kms line connecting the major industrial and business centers of Ghaziabad and Mugalsarai in Uttar Pradesh. The wireless system will also be used to connect train conductors, on-board crew, train dispatchers, station personnel and other operations groups.

Globally, Nortel has been selected to deploy GSM-R networks in three continents and 10 countries. Some of the largest railway operations who have chosen to deploy Nortel railway network include RFF in France, Network Rail in Great Britain, Deutsche Bahn in Germany and China's Ministry of Railways. Recently, Nortel solution was also selected by the Algerian Railways operator SNTF to undertake the first phase of GSM-R project.

Nortel's customers' list in India includes Reliance Infocomm, BSNL, Bharti Airtel, GAIL and Hinduja Technology Media Telecom among others.