The public sector telecom company Indian Telephone Industries Limited (ITI) straddled the Indian telecom scene like a colossus for nearly five decades since its inception in 1948.
At the time of its formation it was a supplier of telecommunication equipment to the Indian government and the rest of the country. This public sector giant enjoyed a near-monopoly status and is believed to have contributed 50% of the telecom infrastructure of India since 1948.
Telephone exchanges, trunk lines, switching equipment, telephone instruments and every conceivable telecom product were manufactured by this behemoth. It was also a major supplier to the Indian Military. Most of the equipment was manufactured mainly in collaboration with European telecom companies.
Safe under the umbrella of protectionism provided by the Indian government where no other player was allowed entry into this sector the company had the whole pie of the Indian market. In its heyday in the 50’s, 60’s and 70’s the brand name ITI was synonymous with a telephone instrument.
The headquarters and main base were at Bangalore and branches and production units were established all over the country in places like Nainital, Srinagar, Rae Bareily, Mankapur and Palakkad .
At its height about 30000 personnel were employed in the company throughout the length and breadth of India. In Bangalore alone the huge factory located in Doorvaninagar had about 18000 workers and managers on its rolls. The company did well - its products were of good quality, priced reasonably and well suited to the hot tropical Indian conditions. The results showed in a healthy balance sheet. Employees received bonus, overtime, pay rises and perks. The telecom behemoth was riding high over the waves and it seemed like it was going to be a long smooth sail.
This was the scene then in the Indian economy which followed a closed door socialist approach. Draconian government and bureaucratic controls throttled the entire Indian economy ad the “Licence Raj” was in full flow. Certain serious defects developed under this regime. Political and bureaucratic interference affected the functioning of companies functioning to their detriment. ITI’s organization too became top heavy in management which ate into its profits. Inefficiencies and low productivity crept into the work force which had been kept artificially insulated from market forces. These were the early shots fired at the high flying ITI balloon.
The death knell was sounded in 1991 when the Manmohan Singh Government adopted far reaching reforms and liberalized the Indian economy, throwing out the “Licence Raj” and the bureaucratic control system. Suddenly the floodgates of competition were opened and free entry allowed into almost all sectors of Indian industry with a few exceptions. ITI found itself competing with new mean and lean players from all over.
The balloon burst for ITI somewhere in the mid-nineties. Revenues fell drastically. ITI’s products found stiff competition from private ones. The workforce became inefficient and unwieldy and losses engulfed the organization. Year after year ITI reeled from one stunning catastrophic loss to another. Successive governments and managements tried to bail it out of trouble but to no avail. The malaise had sunk in so deep that only a master surgeon could perhaps rid the company of its cancer and such a surgeon was nowhere to be found.
The company tried desperately to shed dead weight. Thousands of workers were let go under a Voluntary Retirement Scheme (VRS). As of last count about 13,000 employees were still on its rolls. The company has been declared a sick unit. It has been a most inglorious fall for the telecom major.
The lessons to be learnt from this debacle are manifold. Prominent among them are:
Never take your existence for granted: Having been protected by the Government and given a monopoly status, ITI did little to improve its manufacturing efficiency, its products, its operating costs and sales, as well as its marketing and customer service.
Stay abreast of technology: ITI should have developed and installed technology that would have enabled it to manufacture state of the art telecom products that were priced reasonably and were well marketed in India and abroad. It failed to do so.
Protect your market share: ITI should have zealously protected its markets & scoured the horizon for new and future markets.
Keep your company lean and mean: The management should have been toned up and been made accountable; workers’ performance and productivity improved through a slew of training programs.
Taking unfair advantage of its protected status the telecom giant fell into a deep slumber only to be rudely awakened by hot and happening market forces unleashed by the winds of change. The task is now cut out for the present board of the company. They have to pull up their socks and get their act together to get the ITI balloon flying again. Otherwise the once proud symbol of independent India’s industrial/technological capability will be consigned to a museum as a relic.
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—About our writer:
Pritam is a freelance journalist who writes for the Deccan Herald, interested in business, education & social topics & issues.
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