The Asia Pacific (APAC) region is likely to become the most competitive and dynamic place for global services in the near future, with a growing share of MNCs' (multi-national corporations) investment dominated by neither the US nor the European group of telcos.

Regional players are also lifting their game and alternating their position between fierce competitors or partners of choice for global telcos building their regional offerings and trying to unlock the market for themselves and their MNC customers", said Claudio Castelli (picture), Ovum's senior analyst. 

Telcos aim to increase their service scope in order to avoid the risk of being commoditized as merely providers of global pipes. Most are increasing their offerings in managed and professional services, and some are also developing IT capabilities. However this means entering the low margin IT services game. 

Cloud computing may offer the new opportunities that they have been waiting for. Telcos can take advantage of their global scale networks, which provide capabilities to offer quality of service guarantees and end-to-end service level agreements. However to provide real time and critical business applications in a cloud computing approach for MNCs operating in Asia Pacific, telcos will need to invest in regional facilities and services. 

Besides customer portals and online tools, telcos are also recognizing the importance of professional services, especially at the early stages of communication-as-a-service deployments, to support MNCs with their virtualization transformation and adoption of cloud computing services. 

Starting point: hybrid solutions

MNCs are not going for “pure cloud” approaches initially but are starting with hybrid solutions (integrating cloud-based and on-premise applications), which are project-based and require more integration and consulting services. 

"Regional professional services capabilities or partnerships with local companies will be essential. This seems to be acknowledged by most global telcos, who have developed professional services teams in the region." said Castelli

There are also good prospects for long-term differentiation in areas such as customer support, network integration, consulting, and outsourcing services that build longer-term and more strategic relationships with MNC customers based on ‘inside knowledge’ of customer requirements. Local and regional presence, support and operations center are extremely important. 

"Most telcos see long-term opportunities in ICT outsourcing. The stability of a three- to five- year outsourcing contracts is preferred to that of a two-year telecommunications contract" said Melbourne-based Castelli.

In an one-on-one interview conducted over e-mail, Castelli further outlined the strengths and weaknesses of Asian telcos as potential cloud computing service providers and what must they do to win further trust from their existing customers:

Asia Cloud Forum: In terms of infrastructure and service, which “regional telcos” in Asia are the most mature to evolve as a regional cloud computing service provider? 

Claudio Castelli: The regional telcos covered in the research (Tata Communications, SingTel and Telstra) are still testing and validating their cloud computing offering in their domestic markets rather than focusing on the MNC market. The tier-1 global service providers (Verizon Business, AT&T, BT and Orange) are currently more mature in that market, supporting their cloud offerings with professional services. 

Local telcos such as PCCW Solutions/ SingTel have already pocketed many big service contracts from government and banks. What must they do to further win their trust as a cloud computing service provider? 

Castelli: These contracts are generally based mostly on network services only. However this can be a good foundation for other value-added services, including cloud computing. We believe telcos have a unique opportunity to position cloud computing as an extension of their managed networking solutions (such as MPLS-based VPNs), by offering “on-net” cloud computing capabilities backed up by end-to-end service level agreements (SLAs). However, they will have to work to increase their awareness and credibility, as they are not seen as preferred providers of cloud computing by IT decision-makers.