In an era where digital disruption is the new normal, the telecommunications industry stands at a critical crossroad. As the global industry lead for communications and media at CGI, I am fascinated about the pivotal transformation traditional telecom companies (telcos) are facing, evolving into technology companies (techcos). This shift is not just a rebranding initiative; it is a strategic pivot, essential for their survival and growth.
The call for telcos to transition into techcos stems from a convergence of factors. First, consumer expectations have evolved. Today's customers want more than just connectivity; they demand holistic digital experiences, integrating communication with smart, user-centric solutions.
Additionally, the entry of agile, innovative players in the market, often from the tech sector, is redefining the landscape. These entities leverage innovative technologies to offer services that traditional telcos struggle to match. The competition is growing, and it is evolving. Underpinning these changes is the rapid advancement of technology itself. The emergence of AI, IoT, cloud computing, and 5G networks is revolutionizing potential service offerings, pushing telcos to adapt or risk obsolescence.
Navigating the choppy waters
Transitioning from a telco to a techco is fraught with challenges, namely cultural transformation, requiring a change in thinking from traditional, process oriented operational models to a more dynamic, innovation-driven approach.
Technological overhaul is another significant challenge. Migrating from legacy systems to advanced digital platforms necessitates substantial investment, not just in terms of capital but also time and effort.
Navigating regulatory environments poses a unique challenge. Techco companies must comply with a broader spectrum of policies, especially concerning data security and privacy. Furthermore, workforce transformation is crucial. Transitioning to a tech-focused business model demands new skill sets, necessitating extensive training and new hiring strategies.
Despite these hurdles, the transition offers substantial benefits. Firstly, it enables greater market agility, allowing companies to quickly adapt to technological advancements and changing consumer demands.
Techcos are drivers of innovation, developing new products and services that go beyond traditional offerings, can open new revenue streams and market segments. Operational efficiencies are another significant benefit. Leveraging modern technologies like AI and cloud computing can streamline operations, reduce costs, and improve service quality.
Naturally, enhanced customer experiences are the most direct benefit. Data-driven insights and advanced digital services can significantly improve customer engagement and satisfaction, leading to increased loyalty and revenue.
The path forward
An ecosystemic approach for digital automation success is partnership-based and is a crucial step towards transitioning from a traditional telco to techco. Let’s delve into the main components as factors for success. The components include the enablers (5G, IoT, Edge and The Cloud), the intelligence layer, (API and AI) and industry driven use cases (such as robotic and digital automation) that brings everything together. This strategy involves building a network of partnerships with leading tech firms, startups, consulting and integration companies. These partners have tools and industry experts who understand the language, are aware of the challenges, and can provide the necessary solutions. By utilizing the expertise and innovation of these partners, a telco can quickly adopt innovative technologies, and skills, which are crucial for its evolution into a techco.
This evolution is not exclusive to telcos. We are witnessing similar transformations in other industries such as banking, retail and manufacturing. However, telcos are unique in that they are supplying the communication tools needed by all other industries. Therefore, partnerships with companies who can deliver industry specific solutions is essential.
This collaborative environment promotes knowledge sharing, fosters innovation, and accelerates the development of new services and solutions. Such partnerships enable telco to expand beyond traditional telecom services, offering integrated, innovative technology solutions. This approach is vital for staying competitive in the rapidly evolving digital landscape.
Two international examples
A European story
One major European telecom’s journey exemplifies successful transition. Recognizing the need for change, they embarked on a comprehensive transformation to become a techco. They invested in modernizing their IT infrastructure, leveraging private cloud services, open-source software, and industry standard open digital architectures with Open APIs to simplify and better integrate their business and network systems. They invested in engineering, and software development capabilities, and created digital infrastructure to develop tech products.
This transformation allows this European telecom giant to deliver on their core 5G connectivity solutions, diversify into new areas like IoT, and offer innovative solutions for both individual and business customers. Their transformation to a techco illustrates how embracing technological change can lead to new opportunities and strengthen competitive advantage.
An American telco journey
An American telco giant’s transformation story is very different. In the past, the company strategically broadened their portfolio beyond traditional telecom services, venturing into content creation and distribution with acquisitions in the media sector. Their current aim is to streamline their operations and focus on becoming the top broadband and wireless provider in America.
They have invested billions in fiber optics and 5G technology, positioning themselves as leaders in the next generation of connectivity, offering faster, and more reliable services. They also adopted AI to boost their network capabilities, enhance customer service, reduce fraud, and increase efficiency. They have developed generative AI tools to help employees be more effective and innovative, and implemented AI tools for cybersecurity. This strategic shift is aimed at maximizing effectiveness with the aid of new technologies.
The transition from telco to techco is more than an industry trend; it is a strategic imperative in a world marked by rapid technological advancements and evolving consumer expectations. This journey is very challenging involving cultural, technological, regulatory, workforce transformations that can be approached in various ways. However, the potential rewards are significant.
Key benefits of this transition include increased business agility, the ability to innovate, operational efficiency, and enhanced customer experiences. Progressive telcos should embrace these challenges and take steps to modernize, adapt and restructure their organization to foster ongoing innovation.
By embracing this transformation, telcos can unlock new paths for growth and success. For telcos worldwide, evolving into techcos is not just about staying relevant to stay alive; it is about spearheading the digital future.