by Phillip Redman | October 8, 2010 | Comments Off on Bringing Scale To The TEM Market
Vodafone Global Enterprise, the consulting arm of the large European telecom carrier, announced the acquisition today of two second tier TEM providers, Quickcomm and TnT (the details are well covered by my colleague Eric Goodness in a post today). It brings some welcome consolidation to a competitive market, where the biggest player in terms of pure TEM revenue is a mere $55 million and over 90% of the companies are under $20 million in revenue. Many of these companies are going after Global 1000 enterprises but what they lack is scale, and that is changing with today’s announcement. I think this acquisition is interesting in a few ways:
- Validates the market–though TEM has been around for decades, and has seen rapid growth over the past few years, a large player like Vodafone making two acquisitions in this space really validates the opportunity. Most large providers, either carriers or ITOs, have had partnerships with TEM players in the past, but this is the first big acquisition by a large communications service provider ( the outsourcer HCL made an an acquisition of a small TEM player, Control Point Solutions, last year but hasn’t done much with it yet). I think other carriers and communications service providers will follow this lead. Look to BT, OBS, Verizon and AT&T to respond.
- Bringing scale–TEM isn’t about just domestic services anymore. Most companies want to manage their services globally, and the current crop of small TEM vendors struggle with this. Vodafone brings a global scale to the operations both to cover more regions as well as support larger organizations with more complex needs.
- Applications vs. Managed Service/BPO–TEM isn’t about running an application anymore, it’s about managed services and outsourcing. Today many of the TEM providers have little experience in this area. Vodafone brings a large outsourcing capability to the table with TEM. This will also help evolve from basic TEM services in Europe where Vodafone has its customer strength.
TEM is going through some massive changes. In the end TEM providers that can scale globally and provide managed mobility services, including the novation of carrier contracts, are the ones to succeed here. Being able to sell and manage telecom services globally is the only way this industry will survive–but that does mean less space for the smaller guys. The time has come for continued consolidation and the eventual maturity of the TEM marketplace.
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