Managed VAS gaining momentum

Managed VAS, although in its nascent stage in India, has recently gained momentum. Telcos are already working on outsourcing models for IT and network infrastructure.

Now with the plethora of value added services at their disposal, operators are turning toward an outsourcing model for VAS as well, in order to reduce costs.
An insight into managed VAS:

The managed VAS model is a practice of transferring parts of or all VAS operations including everyday management to another organisation. It saves the telco the hassle of dealing directly with a number of different VAS providers offering abundant services. Ambur Sur, senior vice president, managed services, Comviva, says, “Managed VAS services is a strategic choice. It involves transferring day-to-day service management and operational responsibility to a trusted partner. It supports operators’ need to enhance end user service experience, speed time to market, improve cost-predictability and differentiate their brand in the market.”

Comviva provides end-to-end service management, including management of all related VAS nodes and their associated services. It has deployments of managed VAS services for a greenfield operator in South Asia, as well as an established operator in the region.

Another provider of these services is IMImobile, whose services portfolio is built on a platform called DaVinci. This platform helps operators to deliver services ranging from full track music, live information and content services to social networks etc. DaVinci also provides operators with marketing, advertising and value added voice services, which help them to improve the consumption of existing services and acquire new subscribers. IMImobile is currently working with operators such as Airtel, Vodafone and Virgin Mobile. Recently, the firm tied up with the South African operator MTN as well.
Impact of managed VAS services:

Adopting this service model is very advantageous for telcos, especially in the wake of falling ARPUs. Although voice continues to command a large revenue share, the contribution of VAS is on the rise as it remains the key differentiator for operators. In India, VAS constitutes 9 per cent of the operator's revenue, whereas globally it contributes 20 per cent to operators' revenue, said an IMI spokesperson. IMI expects that in India VAS will become a $5 billion industry in the next three years. So, the need to manage VAS offerings has become more critical than ever before and operators today are looking for a single partner to manage their entire VAS offerings and help their revenue grow.

According to Sur, Comviva’s managed VAS solution focuses on driving revenue growth. “Our solution, based on close monitoring and enhancement and close collaboration with the operator, impacts VAS revenue growth, which generally improves by up to 25 per cent. Operators can experience up to an approximate 20 per cent reduction in manpower OPEX (operating expenditure) costs. Improved revenue is the critical differentiator of the managed VAS services offering compared to other outsourcing models such as IT and network outsourcing.”
The IMImobile spokesperson agrees, “With our managed services approach we have been able to help operators reduce total cost of ownership and increase ROI (return on investment) significantly. Also, this model increases an operator’s bandwidth to focus on core competency.”

On the consumer front managed VAS ensures that VAS services subscribed by the consumer are delivered to him within the expected time frame. For example, when a subscriber opts for a ring back tone (RBT) service, the subscriber usually dials his own number right after setting up the tone, to see if the tone has been provided. This process usually takes about 15 seconds. The challenge according to Comviva is to ensure that this service is delivered in those 15 seconds.

Talking about the challenges, the IMImobile spokesperson points out, “Some challenges include walled garden approach taken by some of the telecom operators, evangelizing the idea of managed VAS in operator community and understanding the psychology of the subscribers and creating appropriate application.”

Despite this, the future for this service model is definitely bright. “Operators across the globe and in India have already initiated the process and started seeing the returns generated from the model. We are very positive about its future,” says the IMI spokesperson. On the other hand Comviva expects that the market for managed services in India will total $4.2 billion by 2014, with managed VAS services contributing around $400 million to that total.