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Managing the World

Indian companies are now beginning to hit big time in remote infrastructure management services

N
ever really talked about much, India's Market Share in Various well as take on large global vendors like
remote or offshore infrastruc- Segments (2003) EDS or IBM. Already, there have been
ture management services cases where Indian companies have
(IMS) could very well emerge as the bagged clients that were earlier with
Infrastructure management services

next big opportunity for Indian IT ser- the biggies. However, Indian companies
Custom development and support

Processing services (BPO)

vices companies who have proved their can’t just live off the offshore cost ad-
capabilities in the applications develop- vantages they offer. Even the likes of
ment and BPO services. While, as of IBM, EDS, and CSC offer that. The
now, only a couple of Indian IT compa- World name of the game is value and this is
nies like HCL Comnet and Wipro Tech- what the Indians have begun to play.
nologies focus majorly on offshore IMS, India
A recent Wipro study revealed that
in the years to come several Indian com- offshore outsourcing of IT infrastruc-
panies are likely to tap this estimated ture management is likely to be the next
$80 billion global opportunity (Gartner Source: IDC, Deutsche
Bank AG estimates 9% 2.3% 0.4% big wave. According to an online sur-
forecast for 2007). The opportunity that vey of 145 executives from various in-
awaits Indian vendors can be gauged dustries, more than 30 percent of the
REVENUES FROM IMS
from Gartner’s prediction that by 2006, respondents were planning to offshore
Company 2003* 2004*s
40 percent of the large enterprises their IT infrastructure in the next 12
Wipro Tech 45 70
would have outsourced their IT infra- months and another 30 percent were
structure management to service pro- HCL Comnet 45 75 researching or evaluating the same
(incl. domestic)
viders at a remote location. with active interest. Interest in offshore
On other hand, IMS is becoming CMC 30 45 BPO was also gaining more ground
(intl. revenues)
important from Indian IT services com- with 34 percent of the respondents
*Calendar year Revenue in $ million
panies’ perspective as it can help them sÿForecast Source: Deutsche Bank AG estimates planning to offshore some of their busi-
break into large outsourcing deals as ness processes in the next 12 months.
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24 | VOICE&DATA | SEPT 04 | voicendata.com | A CyberMedia Publication
 pass servers, databases, networks, se- 250,000 end users across 15 countries
curity, applications, and e-biz. for around 87 clients. Currently, it has
“Through managing these components over 1,200 people dedicated to IMS.
from a remote location, companies can Indian companies apart, global ma-
cut down their cost of infrastructure jors too have been busy setting up off-
operations and management by 40–60 shore IMS delivery facilities in India.
percent while also gaining access to For example, Computer Sciences Cor-
expert ‘skill-on-tap’ on a 24x7 basis,” poration (CSC), which has been provid-
says Anant Gupta, COO, HCL Comnet. ing infrastructure management
Currently, most organizations, support for decades, has now moved a
which have been outsourcing infra- part of the work to India where it al-
structure management, follow a mix of ready has 400 people dedicated to IMS
remote and onsite management. As of performing 30 different infrastructure
today, it is more of onsite. “As a busi- services management functions. “Low-
ness, IMS is more onsite. Once the busi- er costs and high skills availability has
ness matures, the offshore component been the major attraction as far as In-
would increase as has happened in our dia is concerned,” says Brian Manning,
case. In 1999, when we started, less director, global infrastructure solutions,
than five percent of the work we did CSC.
was done offshore, now it is 58 percent What is more interesting is that ser-
offshore,” says GK Prasanna, vice pres- vice providers are now offering more
ident technology, infrastructure servic- sophisticated services from remote lo-
es, Wipro Technologies. cations. These services include firewall
No doubt, the first movers in this management, intrusion detection,
space, Wipro Technologies and HCL VPN, network performance manage-
Comnet, are bullish on remote infra- ment, and event response among oth-
structure management. Wipro Technol- ers on a 24x7 basis.
GRAPHICS: NAVEEN K SAINI
ogies has around 1,300 people dedicated While cost remains the main factor,
No doubt, IMS is already a growing to IMS. It has around 130 customers in which is driving companies to offshore
business for Indian companies. At Europe and the US and 157 in India their infrastructure management ser-
present, IMS-related exports from In- and Asia-Pacific. HCL Comnet current- vices, as Prasanna of Wipro Technolo-
dia are around $300 million and are ly manages over 35,000 devices (15,000 gies puts it, customers also realize they
likely to cross $1 billion in the next three servers, 20,000 network nodes) and get better value from the work done in
years (Deutsche Bank AG estimates).
Last year, vendors like Wipro and HCL
Comnet signed up a number of IMS “As a business, IMS is
deals with clients including some For-
tune 500 companies. Global companies
more onsite. Once the
like AMD, Nike, NCR, Shell, Honeywell business matures, the
Investments, Extreme Networks, and offshore component
Putnam Investments now depend on will increase”
Indian vendors for management of their
IT infrastructure, usually spread across —GK Prasanna,
the globe. In fact, there are a growing VP, technology infrastructure
number of IT services contracts (main- services, Wipro Technologies
ly for offshore applications develop-
ment) that now have an infrastructure
management component also.
Infrastructure management out-
sourcing has been there for some time “Through managing
now. In fact, many large European and infrastructure from a
US companies have been outsourcing
IMS functions within their own coun-
remote location,
tries for long. However, with the recent companies can cut down
advancements in telecom and technol- their cost of operations
ogy, the concept of remote delivery of and management by 40–
services from a remote/offshore location
has picked up. As per IDC’s estimates, 60 percent ”
more than 85 percent of infrastructure —Anant Gupta,
components can be managed from such COO, HCL Comnet
locations. These components encom-
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Typical Set-up for Providing Infrastructure Management Services

Vendor Location (India)

Client Premises (US)

MCI Data
Center
NOC
MCI VSNL
POP POP

Cisco

Services Offered from the NOC

Monitoring Help Desk Administration Performance Optimization Troubleshooting

Security Storage Databases Desktops

Servers Systems Applications

Source: Industry data, Gartner, Deutsche Bank AG estimates

An IMS vendor in India can connect to the network of an overseas customer to manage network security and firewall
functioning. The vendor can also remotely control and fix problems on the customer’s desktops
India. Gupta of HCL Comnet agrees: development. And because it is high
“Corporates have started preferring risk, experience and capability demon-
remote management of their infrastruc- stration is a must for service providers
ture because of lower costs (there is a to get clients,” emphasizes Prasanna,
reduction of up to 50 percent in IT op- adding that the first customer is expo-
erations costs), 24x7 coverage, disaster nentially difficult to get even though it
recovery/business continuity, and low- could be easier thereafter. Prasanna
er investment in tools ownership and lists security as one of the biggest con-
upgradation.” Edward Desouza, head, cern of the customers, “A customer has
network operations, GTL points out already spent millions on security. Now
that the increased complexity of IT in- you are asking him to open a pipe ten
frastructure, tighter automation, and thousand miles away, that is surely
online interlinking of processes within risky,” he says. Gupta too stresses that
the enterprise and across customers a number of concerns have to be ad-
and partners, shortage of tech and pro-
“Offshoring of infrastructure dressed before he can expect a custom-
cess skills, growing realization of the management has brought in er. These concerns mainly relate to
opportunity cost of focusing on non-core significant value to us” quality and reliability of infrastructure,
skills, and finally a reduced total cost —Paul Hooper, people, processes, SLAs, security, and
of ownership because of reduced spend VP, information technology, geopolitical environment.
on hiring, training, retention, infra- Extreme Networks Challenges and issues apart, IMS
structure among others are some of the could certainly be the next big thing for
reasons why IMS is picking up. Indian companies, provided they put
Paul Hooper, vice president, infor- Comnet for remote infrastructure the right ingredients in place. Prasan-
mation technology, Extreme Networks management. na of Wipro Technologies aptly defines
says that offshoring of infrastructure However, despite the growing attrac- the potential, “Every offshore develop-
management has brought in significant tiveness of the concept, convincing cus- ment centre (ODC), which India has, is
value to his company. In the 12 months tomers to outsource their entire IT a potential vehicle for offering remote
since it started working with HCL Com- infrastructure services management to IMS. All ODCs have a security clearance
net, Extreme not only witnessed almost an offshore location is not an easy task. from the customer; they are also a testi-
40 percent reduction in the total cost of There are a number of concerns which, mony to our ability to deliver services as
ownership but also a dramatic improve- if not taken care of, could make pro- well as are the relationship we have with
ment in quality of service to its custom- spective clients take a decision against the clients. So, each one of them can be-
ers. Incidentally, Extreme was earlier a it. “The big issue here is that the ser- come a remote IMS facility.”
customer of EDS and it opted out of a vice is delivered online so the risk in- Ravi Shekhar Pandey
multi-year contract to partner HCL volved is higher than in applications ravisp@cybermedia.co.in
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26 | VOICE&DATA | SEPT 04 | voicendata.com | A CyberMedia Publication
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Global Sourcing Survey

An online global survey by Wipro reveals that moving towards a wider service mix is hot

A
global online survey, conducted by Wipro during April–May 2004 polled 145 senior and mid-management
executives across industries. It reveals that the global sourcing mix for most organizations is evolving to include
multiple and more complex service lines, with IT infrastructure high on the global sourcing list. This trend is
spurring companies to look for partners with wider capabilities. Excerpts from the survey:

1. Global Sourcing Is Increasingly a CXO-led Strategic Initiative

OFFSHORE OUTSOURCING STATUS AT ORGANIZATION

No immediate
10% plans

Researching/
21% evaluating

23% Pilot stage

9% Offshoring point applications

38%
CXO
Strategic
initiative

0% 10% 20% 30% 40%

PERCENTAGE OF RESPONDENTS

■ 90 percent of respondents were actively engaged in active global sourcing or evaluation

■ With 38 percent of the organizations polled, global sourcing is a CXO-led strategic initiative

2. Beyond Applications Development: Service Lines Considered for Global Sourcing are Increasing

NUMBER OF SERVICE LINES TO BE OFFSHORED

6 5%
5 2%
4 15%
3 32%
2 23%
1
24%

0% 5% 10% 15% 20% 25% 30% 35%

PERCENTAGE OF RESPONDENTS

■ More than 54 percent of respondents were willing to globally source more than three service lines, indicating maturity
in the global sourcing model and increased interest in newer service lines
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SERVICES DESIRED IN THE NEXT 12 MONTHS

65% 66%
PERCENTAGE OF RESPONDENTS

34%
30%
23%
15%
10%

New Application Package IT Business Vertical Not applicable

application maintenance implementation infrastructure process domain as we are not
development management outsourcing solutions considering

SERVICE TYPE

■ Traditional applications development and management continue to lead. Newer service areas like IT infrastructure
management, critical business processes, and vertical domain solutions are increasingly being considered for global
sourcing
■ Close to 50 percent of organizations planning to offshore multiple service lines in the next 12 months were likely to
consider new vendors. There is a need for one-stop partners with wider portfolios

3. Focus on Global Sourcing of IT Infrastructure Services Evident Across Industries

A look at how the global sourcing of IT infrastructure will fare:
■ Will source globally in the next 12 months: 30 percent
■ Evaluating/researching it actively: 30 percent
In effect, more than 60 percent of the organizations were actively considering global sourcing of IT infrastructure in
the near future. It is likely to be the next big wave

4. Spends On Global Sourcing Expected To Surge

RESPONDENT PROFILE
Industry Percentage
INCREASE IN IT SPEND Computer Hardware 5
35% Computer Software 8.3
PERCENTAGE OF RESPONDENTS

Finance/Banking/Brokerage 21.6
21% Insurance 13.3
14% 13% Manufacturing 8.3
8% 10%
Media/Publishing/Broadcasting 5
Pharmaceuticals 6.6
10–30% 30–60% 60–100% <10% Decrease or
remain the same
More than 100%
Telecommunications 10
INCREASE IN IT BUDGET Others* 21.9
* Includes arts/entertainment, energy/
■ Over 87 percent of respondents planned to increase the IT global sourcing utilities, retail, transportation, and
spends in the next 12 months healthcare/hospitals
● On an average, organizations were likely to increase their offshore out-
sourcing spend by 34 percent
■ The big spenders: Percentage of respondents planning to increase spends: Nirav Desai, manager-strategic
● Manufacturing: 80 percent. Of these, 50 percent plan to outsource IT marketing, Wipro
infrastructure Gaurav Marya, senior executive-
● Pharmaceutical: 75 percent. Of these, 75 percent plan to outsource IT strategic marketing, Wipro
infrastructure Misal Singh Khundia, senior
● Telecommunications: 87 percent. Of these, 17 percent plan to outsource IT executive-strategic marketing, Wipro
infrastructure vadmail@cybermedia.co.in
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