Managing networks worldwide

Indian IT firms are leveraging their offshore expertise and taking a shot at the lucrative remote infrastructure management market, says G Sankaranarayanan

The most active verticals in outsourcing their IT infrastructure needs are BFSI, manufacturing, energy and utilities G K Prasanna Vice President Wipro

Remote infrastructure management is a relatively new opportunity that could prove to be the next gold mine for Indian software service firms. Currently, most Indian players derive their revenues from services such as packaged application implementation, application development and integration. This space has been subject to huge pricing pressures on account of increased competition. Compared to this, remote infrastructure management is a $111 billion market (Source: Forrester Research) that has not been tapped by most Indian companies. While MNC giants such as IBM, EDS and CSC dominate this field, Indian firms are beginning to take a crack at this market by leveraging their low-cost offshore strengths. They are approaching the infrastructure management space the same way they approached the software services market—by offering onsite support—and once the client is confident of their capabilities, they move the work offshore. Currently, TCS, Wipro, Infosys, HCL Comnet and Patni are among those who offer infrastructure management services.

With India’s traditional advantages of low-cost labour and the time-zone, global organisations are increasingly asking Indian firms to monitor their networks and databases. “Many global organisations are looking to outsource their infrastructure management needs to Indian companies,” notes Satish Joshi, senior vice-president, Patni, which has signed an OEM agreement with InteQ Corporation, a provider of remote infrastructure management solutions.

The remote infrastructure management market can be further divided into network, systems and storage management. The potential is huge as analysts estimate that over 60 percent of an organisation’s IT budget is allocated to infrastructure management. Typically, 75 percent of a company’s IT spend is for operational or ‘run’ costs; this includes infrastructure and application management. Infrastructure spend is typically estimated to be around 50 percent of the entire cost of running a business, including manpower, depreciation, asset maintenance contracts, software and hardware.

Calling specialists

From a business perspective, the market can be segmented into different levels depending upon the requirements of the end-users. The first level is the exclusive management of certain specific elements of an organisation’s IT infrastructure. This could be the network, or a specific application or operating system. For example, the management software for a Cisco product is usually CiscoWorks, and for an HP ProLiant server it is HP’s System Insight Manager. The first level can be done onsite or from a remote location. The second level lies in developing a customised software solution that enables effective management of the entire IT infrastructure rather than specific elements. This service category, defined as enterprise management, goes beyond monitoring the performance of individual elements. With most organisations having a mix of different elements, it has become imperative for organisations to have specialists to manage their networks.

Bithin Talukdar, market development and alliances manager, software global business unit, HP, explains the evolution of infrastructure management when he says, “With the advent of the Internet, the meaning of IT infrastructure has changed. Today, no organisation can afford downtime since it hits a company’s bottomline.” The boom in the Indian remote infrastructure management market can be seen from the sales of infrastructure management products of companies such as Computer Associates, IBM, HP and Zenith Infotech.

The race is on

Wipro is in the forefront with more than 180 clients in India and 95 clients abroad. It started learning the ropes of the infrastructure management market by concentrating on the domestic market. Once it gained confidence, the company rapidly started expanding globally. Currently, 18 percent of the company’s revenues come from providing infrastructure management services. More importantly, almost 55 percent of the infrastructure management services at Wipro are done offshore, which results in better margins for the company as compared to the onsite model.

Tier-I players, Wipro being one, have an advantage over smaller players as they can utilise their huge reach and presence in different countries by offering support to global companies. A global presence is necessary for companies to play in the infrastructure management space as most clients are reluctant to hand over their networks to outsiders. Unlike application development, infrastructure management is a critical issue because even a few minutes of downtime can cripple a client’s business. To avoid this problem, Wipro has set up network operating centres in the US, UK and Japan. Work for clients is done in the same country, and later, once the client’s confidence is gained, it is moved offshore.

Says G K Prasanna, vice-president, technology infrastructure services division, Wipro, “The most active verticals in outsourcing IT infrastructure needs are BFSI, manufacturing, energy and utilities. This is because most of these companies have been early adopters in using the offshore IT services model.”

For Cognizant, a relatively new entrant, revenues from the IT infrastructure management space are picking up; it already accounts for 2 percent of the company’s total revenues. “We entered this space only last year, and already service over 25 customers,” says S Narayanan, the company’s practice head, IT infrastructure services. Cognizant focusses on the application infrastructure market as it believes that it can be leveraged for integrating the offering with its traditional application development and integration strengths. The company is targeting medium-to-large firms which typically have their own data centres. Narayanan believes that this segment is lucrative as organisations are looking to cut costs by outsourcing these areas to independent service providers. In a strategy to drive growth, the company has also developed domain-specific solutions.

“Our service offerings are customised for each vertical as this can have a significant impact on the benefits,” says Narayanan. For example, the company has a client called Wallenius Wilhelmsen, a specialist player in providing ocean and inland supply chain management solutions. Its IT infrastructure is quite complex as it operates over 60 vessels and 600 vehicle transporters across five continents. Cognizant has been selected to provide infrastructure management services for monitoring and maintaining the company’s IT infrastructure across the world.

India’s sixth largest player, Patni, is also moving aggressively in this space by setting up a strategic business unit for enterprise systems management (ESM). Currently, Patni gets around 6 percent of its revenues from infrastructure management. The company has established its ESM Global Visibility Centre in Mumbai, which houses an NOC that provides managed infrastructure services to its clients. This facility provides complete network infrastructure component monitoring and management, including incident reporting, escalation, vendor management, patch updating and technical help-desk services.

Establishing standards

Like the software services space where Indian vendors went on a quality certification binge, vendors in the infrastructure management space are also looking at adopting industry practices such as the ITIL (IT Infrastructure Library) framework which is the preferred standard in IT services management.

Nevertheless, while the opportunity is colossal, it is too early to say whether Indian software players can repeat the success of the BPO and IT services industry in the infrastructure management space.

sankar@expresscomputeronline.com