Industry Spotlight for August – Future of Work

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The Future of Work is here, now. Organisations were faced with unprecedented challenges of coping with the work-from-home model, when COVID-19 hit earlier this year. Many organisations managed the pivot very successfully, but all organisations were impacted in some way. Various trends have emerged over the last few months, that are likely to persist long after the immediate COVID-19 measures are removed by countries. In the Ecosystm Digital Priorities in the New Normal study, we find that organisations will continue to cater for remote employees (Figure 1) and keep a firm eye on employee experience (EX).

Organisations will continue to Enable Remote working 2020-21

August has seen these clear trends in the Future of Work

#1 Tech companies leading from the front in embracing the Future of Work

As the pandemic continued to spread across the globe, various companies adopted the work from home model at a scale never seen before. While it is still unclear how the work model will look like, many companies continue to extend their remote working policies for the remaining year, and some are even thinking of making it a permanent move.

Tech companies appear to be the most proactive in extending remote working. Google, Microsoft, and AWS have all extended their work from home model till the end of the year or till the middle of next year.  Earlier in the month Facebook extended its work from home program until mid-2021 and are also giving employees USD 1,000 to equip their home offices. This appears to be a long-term policy, with the company announcing in May that in the next 5-10 years, they expect 50% of their employees to be remote. Similarly, Salesforce and Uber also announced that they would be extending remote working till the mid-next year, and are providing funding for employees to set up the right work environment.

In Australia, Atlassian has made work from home a permanent option for their employees. They will continue to operate their physical offices but have given employees the option to choose where they want to work from.

Some organisations have gone beyond announcing these measures. Slack has talked about how they are evolving their corporate culture. For example, they have evolved their hiring policies and most new roles are open to remote candidates. Going forward, they are evaluating a more asynchronous work environment where employees can work the hours that make sense for them. In their communique, they are open about the fluid nature of the work environment and the challenges that employees and organisations might face as their shift their work models.

Organisations will have to evaluate multiple factors before coming up with the right model that suits their corporate culture and nature of work, but it appears that tech companies are showing the industry how it can be done.

#2 Tech companies evolve their capabilities to enable the Future of Work

Right from the start of the crisis, we have seen organisations make technology-led pivots. Technology providers are responding – and fast – to the changing environment and are evolving their capabilities to help their customers embrace the digital Future of Work.

Many of these responses have included strengthening their ecosystems and collaborating with other technology providers. Wipro and Intel announced a collaboration between Wipro’s LIVE Workspace digital workspace solution and the Intel vPro platform to enable remote IT support and solution. The solution provides enhanced protection and security against firmware-level attacks. Slack and Atlassian strengthened their alliance with app integrations and an account ‘passport’ in a joint go-to-market move, to reduce the time spent logging into separate services and products. This will enable both vendors to focus on their strengths in remote working tools and provide seamless services to their customers.

Tech companies have also announced product enhancements and new capabilities. CBTS has evolved their cloud-based unified communications, collaboration and networking solutions, with an AI-powered Secure Remote Collaboration solution, powered by Cisco Webex. With seamless integration of Cisco Webex software, Cisco Security software, and endpoints that combine high-definition cameras, microphones, and speakers, with automatic noise reduction, the solution now offers features such real-time transcription, closed captioning, and recording for post-meeting transcripts. 

Communication and Collaboration tools have been in the limelight since the start of the crisis with providers such as Zoom, Microsoft Teams and Slack introducing new features throughout. In August Microsoft enhanced the capabilities of Teams and introduced a range of new features to the Teams Business Communications System. It now offers the option to host calls of up to 20,000 participants with a limit to 1,000 for interactive meetings, after which the call automatically shifts to a “view only” mode.  With the possibility of remote working becoming a reality even after the crisis is over, Microsoft is looking to make Teams relevant for a range of meeting needs – from one-on-one meetings up to large events and conferences. In the near future, the solution will also allow organisations to add corporate branding, starting with branded meeting lobbies, followed by branded meeting experiences.

While many of these solutions are aimed at large enterprises, tech providers are also aware that they are now receiving a lot of business from small and medium enterprises (SMEs), struggling to make changes to their technology environment with limited resources. Juniper has expanded their WiFi 6 access points to include 4 new access points aimed at outdoor environments, SMEs, retail sites, K-12 schools, medical clinics and even the individual remote worker. While WiFi 6 is designed for high-density public or private environments, it is also designed for IoT deployments and in workplaces that use videoconferencing and other applications that require high bandwidth.

#3 The Future of Work is driving up hardware sales

Ecosystm research shows that at the start of the crisis, 76% of organisations increased investments in hardware – including PCs, devices, headsets, and conferencing units – and 67% of organisations expect their hardware spending to go up in 2020-21. Remote working remains a reality across enterprises. Despite the huge increase in demand, it became difficult for hardware providers to fulfil orders initially, with a disrupted supply chain, store closures and a rapid shift to eCommerce channels. This quarter has seen a steady rise in hardware sales, as providers overcome some of their initial challenges.

Apart from enterprise sales, there has been a surge in the consumer demand for PCs and devices. While remote working is a key contributor, online education and entertainment are mostly prompting homebound people to invest more in hardware. Even accessories such as joysticks are in short supply – a trend that seems to have been accelerated by the Microsoft Flight Simulator launch earlier this month.

The demand for both iPad and Mac saw double-digit growth in this quarter. Around half of the customers purchasing these devices were new to the product. Apple sees the rise in demand from remote workers and students. Lenovo reported a 31% increase in Q1 net profits with demand surges in China, Europe, the Middle East and Africa.

 #4 The impact on Real Estate is beginning to show

The demand for prime real estate has been hit by remote working and organisations not renewing leases or downsizing – both because most employees are working remotely and because of operational cost optimisation during the crisis. This is going to have a longer-term impact on the market, as organisations re-evaluate their need for physical office space. Some organisations will reduce office space, and many will re-design their offices to cater to virtual interactions (Figure 1). While now, Ecosystm research shows that only 16% of enterprises are expecting a reduction of commercial space, this might well change over the months to come. Organisations might even feel the need to have multiple offices in suburbs to make it convenient for their hybrid workers to commute to work on the days they have to. Amazon is offering employees additional choices for smaller offices outside the city of Seattle.

But the Future of Work and the rise of a distributed workforce is beginning to show an initial impact on the real estate industry. Last week saw Pinterest cancel a large office lease at a building to be constructed near its headquarters in San Francisco. The company felt that it might not be the right time to go ahead with the deal, as they are re-evaluating where employees would like to work from in the future. Even the termination fees of USD 89.5 million did not discourage them. They will continue to maintain their existing work premises but do not see feel that it is the right time to make additional real estate investments, as they re-evaluate where employees would like to work from in the future.  

There is a need for organisations to prepare themselves for the Future of Work – now! Ecosystm has launched a new 360o Future of Work practice, leveraging real-time market data from our platform combined with insights from our industry practitioners and experienced analysts, to guide organisations as they shift and define their new workplace strategies.   


Ecosystm Principal Advisors; Tim Sheedy (Technology), Ravi Bhogaraju (People & Organisations), and Mike Zamora (Infrastructure & Offices) provided holistic view of what the Future of Work will look like.
Ecosystm Engage Future of Work

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The Resurgence of India’s Telecom Industry

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5/5 (1) The telecom industry in India was in a pretty tight spot due to various challenges led by the Adjusted Gross Revenue (AGR) contention. AGR is a fee-sharing mechanism between the Government and the telecom providers who shifted to ‘revenue-sharing fee’ model in 1999, from the ‘fixed license fee’ model. Telecom providers are supposed to share a percentage of their AGR with the Government. While the government says that AGR includes all revenues from both telecom as well as non-telecom services, the operators contend that it should include only the revenue from core services. While the legal proceedings continue, India’s telecom industry continued facing other challenges such as one of the lowest ARPUs in the world and intense competition.

However, COVID-19 has given the industry a boost, changing the market dynamics and due to the increased interests of global investors. In his report, The New Normal for Telecom Providers in Southeast Asia, Ecosystm Principal Advisor, Shamir Amanullah talks about how the telecom sector has fast evolved as the backbone of business and social interactions as the adoption of applications such as video conferencing and collaborative tools surge. Streaming services such as Netflix have become the go-to source for entertainment, putting the telecom sector in the spotlight today.

India’s monthly active internet user base is estimated to touch 639 million by the end of December, thanks to the COVID-19-induced measures that have forced people to stay indoors. Currently estimated at 574 million, the number of monthly active internet users has grown 24% over that of 2019, indicating an overall penetration of 41% last year. Further, It is estimated that India will have more than 907 million internet users by 2023, accounting for nearly 64% of the population. There are also around 71 million children aged 5-11 years, who go online using devices of family members exhibiting high future digital adoption in the Gen Z.

India’s rural areas are driving the country’s digital revolution, with a 45% growth in internet penetration in 2019 as compared to 11% in urban India. Rural India has an estimated 264 million internet users and is expected to reach 304 million in 2020. Local language content and video drive the internet boom in rural India, with a 250% rise in penetration in the last four years. Mobile is the device of choice for 100% of active users to browse the internet.

Global Interest in the Indian Market

Reliance Jio

Jio Platforms, a subsidiary of Reliance Industries  (India’s most valued firm) has raised an estimate of USD 20.2 billion in the past four months from 13 investors by selling about 33% stake in the firm. To put this into context, India’s entire start-up ecosystem raised USD 14.5 billion last year! Besides Google and Facebook, the list of investors includes Qualcomm Investment Ventures, Intel Capital, KKR, TPG, General Atlantic, Silver Lake, L Catterton, Vista Equity Partners, the Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund.

Google’s new investment gives Jio Platforms an equity valuation of USD 58 billion. The investment today from Google is one of the rare instances when it has joined its global rival Facebook in backing a firm. Google and Reliance Jio Platforms will work on a customised version of the Android operating system to develop low-cost, entry-level smartphones to serve the next hundreds of millions of users, according to Mukesh Ambani, Chairman and MD of Reliance Industries. These phones will support Google Play and future wireless standard 5G, he said.

Jio is increasing its focus on the development of areas such as digital services, education, healthcare and entertainment that can support economic growth and social inclusion at a critical time for the economy. At the Reliance Annual General meet, it was announced that  Jio has developed a complete 5G solution from scratch that will enable us the launch of a world-class 5G service in India. Jio also revealed that the company is developing Jio TV Plus, Jio Glass, and more.

With an estimated 387 million subscribers as on 31st March 2020 making them the largest in the country, Jio Platforms provides telecom, broadband, and digital content services. Leveraging advanced technologies like Big Data Analytics, AI, IoT, Augmented and Mixed Reality, and Blockchain, this platform is focused on providing affordable internet connectivity with the content to match.

Bharti Airtel

Bharti Telecom, the promoter of Bharti Airtel, has sold a 2.75% stake in the telecom operator for an estimated USD 1.15 billion in May 2020 to a healthy mix of investors – long-only and hedge fund – across Asia, Europe and the US. The promoter entity will use the proceeds of the stake sale to pare debt and become a “debt-free company”.

It was reported that Amazon is in early-stage talks to buy a stake worth USD 2 billion in Bharti Airtel. This translates to a 5% stake based on the current market valuation of the telecom operator. There have also been conversations about the possibility of an agreement on a commercial transaction where Airtel would offer Amazon’s products at cheaper rates. However, Bharti Airtel has clarified that it works with digital and OTT platforms from time-to-time but has no other activity to report.

Airtel has also shared plans to integrate technology and telecom to build a digital platform to take on Jio’s ambitions of evolving into a tech and consumer company. To scale up its digital platforms business, Airtel has been betting on four pillars: data, distribution, payments, and network.

Bharti Airtel also announced it has partnered with Verizon to launch the BlueJeans video-conferencing service in India to serve business customers in the world’s second-largest internet market. They have an estimated 328 million subscribers as on 31st March 2020 making them the 2nd largest in the country.

The Third Player

Vodafone Idea Limited

Vodafone has an estimated 319 million subscribers as on 31st March 2020 making them the 3rd largest telecom provider in the country. There was unvalidated news that Google had shown interest in Vodafone but that does not seem relevant now given their investment in Jio.

The AGR case remains a significant factor for the telecom sector, particularly for Vodafone given their precarious financial position.

However, in recent times, their ARPU is expected to increase by over 40% from USD 1.23 to USD 1.88, through increased pricing. The stock market is responding positively to Vodafone with the stock almost doubling in the last 1 month

 


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For more information on Ecosystm’s “The New Normal for Telecom Providers in South East Asia”, report please contact us at info@ecosystm360.com


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Nvidia and Intel Race For The Future Of Machine Learning

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4/5 (4) Two things happened recently that 99% of the ICT world would normally miss. After all microprocessor and chip interconnect technology is quite the geek area where we generally don’t venture into. So why would I want to bring this to your attention?

We are excited about the innovation that analytics, machine learning (ML) and all things real time processing will bring to our lives and the way we run our business. The data center, be it on an enterprise premise or truly on a cloud service provider’s infrastructure is being pressured to provide compute, memory, input/output (I/O) and storage requirements to take advantage of the hardware engineers would call ‘accelerators’. In its most simple form, an accelerator microprocessor does the specialty work for ML and analytics algorithms while the main microprocessor is trying to hold everything else together to ensure that all of the silicon parts are in sync. If we have a ML accelerator that is too fast with its answers, it will sit and wait for everyone else as its outcomes squeezed down a narrow, slow pipe or interconnect – in other words, the servers that are in the data center are not optimized for these workloads. The connection between the accelerators and the main components becomes the slowest and weakest link…. So now back to the news of the day.

A new high speed CPU-to-device interconnect standard, the Common Express Link (CXL) 1.0 was announced by Intel and a consortium of leading technology companies (Huawei and Cisco in the network infrastructure space, HPE and Dell EMC in the server hardware market, and Alibaba, Facebook, Google and Microsoft for the cloud services provider markets). CXL joins a crowded field of other standards already in the server link market including CAPI, NVLINK, GEN-Z and CCIX. CXL is being positioned to improve the performance of the links between FPGA and GPUs, the most common accelerators to be involved in ML-like workloads.

Of course there were some names that were absent from the launch – Arm, AMD, Nvidia, IBM, Amazon and Baidu. Each of them are members of the other standards bodies and probably are playing the waiting game.

Now let’s pause for a moment and look at the other announcement that happened at the same time. Nvidia and Mellanox announced that the two companies had reached a definitive agreement under which Nvidia will acquire Mellanox for $6.9 billion.  Nvidia puts the acquisition reasons as “The data and compute intensity of modern workloads in AI, scientific computing and data analytics is growing exponentially and has put enormous performance demands on hyperscale and enterprise datacenters. While computing demand is surging, CPU performance advances are slowing as Moore’s law has ended. This has led to the adoption of accelerated computing with Nvidia GPUs and Mellanox’s intelligent networking solutions.”

So to me it seems that despite Intel working on CXL for four years, it looks like they might have been outbid by Nvidia for Mellanox. Mellanox has been around for 20 years and was the major supplier of Infiniband, a high speed interconnect that is common in high performance workloads and very well accepted by the HPC industry. (Note: Intel was also one of the founders of the Infiniband Trade Association, IBTA, before they opted to refocus on the PCI bus). With the growing need for fast links between the accelerators and the microprocessors, it would seem like Mellanox persistence had paid off and now has the market coming to it. One can’t help but think that as soon as Intel knew that Nvidia was getting Mellanox, it pushed forward with the CXL announcement – rumors that have had no response from any of the parties.

Advice for Tech Suppliers:

The two announcements are great for any vendor who is entering the AI, intense computing world using graphics and floating point arithmetic functions. We know that more digital-oriented solutions are asking for analytics based outcomes so there will be a growing demand for broader commoditized server platforms to support them. Tech suppliers should avoid backing or picking one of either the CXL or Infiniband at the moment until we see how the CXL standard evolves and how nVidia integrates Mellanox.

Advice for Tech Users:

These two announcements reflect innovation that is generally so far away from the end user, that it can go unnoticed. However, think about how USB (Universal Serial Bus) has changed the way we connect devices to our laptops, servers and other mobile devices. The same will true for this connection as more and more data is both read and outcomes generated by the ‘accelerators’ for the way we drive our cars, digitize our factories, run our hospitals, and search the Internet. Innovation in this space just got a shot in the arm from these two announcements.

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