IT/ITeS

Hunger for bandwidth

Bandwidth tops IT/ITeS agenda. The existing bandwidth for many of these companies is expected to double this year. Storage and compliance are the other major concerns for this segment, writes Vinutha V

IT/ITeS seems to be the only vertical where most respondents feel that their business goals and IT are closely aligned. The segment has recorded an average growth rate of 20.83 percent in 2005-06 and approximately every company which is a part of it has 625 PCs. During 2005-06, most IT/ITeS companies made investments in security followed by ERP (Enterprise Resource Planning), Business Intelli-gence (BI), servers and storage. In order to emphasise on production and expansion, the IT/ITeS companies have prioritised their IT investment for the year 2006-07 thus; bandwidth, enterprise packaged software, security and enterprise hardware.

IT/ITeS companies need to be compliant with industry standards and meet their end-customer’s mandates. Standards set by industry bodies such as Nasscom with regard to outsourcing, cyber law requirements, and information security environment benchmarks for companies operating in India serve the purpose.

Companies in this vertical find that their business is expanding rapidly. Flextronics Software develops software for the telecom vertical. It sees a huge business opportunity and plans to acquire companies in the near future. It believes that IT is an essential component to develop its business.

The main agenda for Sonata Software is to invest in desktops, servers and connectivity. Says Harish Gururaja, Consultant, IT, Sonata Software, “This year’s IT investment is driven by aims such as increasing headcount for our new operations, meeting customer demands and upgrading technology.” Polaris Software has started using SOA (Service Oriented Architecture) to create an agile IT infrastructure that takes care of rapid technological changes.

Appetite for bandwidth

IT/ITeS is witnessing an increased appetite for bandwidth. These companies have made large investments in bandwidth in the previous fiscal. Take for instance, Zenith Infosystems which invests about Rs 30 lakh per annum in its leased line. Sonata aims at retaining robust connectivity with its clients as sometimes files are hosted on the client’s site. With this background, existing bandwidth is expected to double this year for most IT/ITeS companies. Garima S Gurnani, Manager, Marketing, Hughes Software says, “IT/ITeS is all about bulky data applications and data-mining and such heavy data flow is paving the way for the growth of bandwidth consumption. Moreover, applications such as IP-VPN, which is MPLS (Multi Protocol Label Switching)-based, is gaining momentum within this sector as this technology enables greater granularity.”

S Chandra Mouleswaran, Vice-president, IT, Polaris Software says, “We use an accumulated bandwidth of 100 Mbps and our developers and support groups are usually more on main traffic. We are seeing a good trend catching up due to bandwidth. Then there are other advantages; the price of bandwidth is coming down, options are increasing and more secured and reliable communication is being made available.”

VoIP and other bandwidth-hungry apps

As bandwidth prices drop, IT/ITeS companies are investing in VoIP. Comments, B Ashok, Senior Vice-president, ITS, Cisco Systems (India & SAARC), “The easiest and credible indicator for a cost comparison between circuit-switched networks and IP-based networks is to compare investments made in gateway equipment. The number of port requirements in TDM (Time Division Multiplexing) infrastructure is much larger (about five to six times in a large network) to handle the same amount of traffic.” Time for deployment of a VoIP network of an equivalent capacity is generally 1/5th as compared to TDM switches. The business case for VoIP is based on immediate, substantial operational savings and reduced expenditure in the short term, coupled with the potential for increased revenues and marketshare from multimedia and real-time IP services in the long term.

Security is a priority

Information and its protection is the key for this industry vertical. Of the 14 IT/ITeS companies surveyed by IMRB, 50 percent have BS (British Standard) 7799 certification. The standard provides an organisation with a controlled framework to implement a security policy. BS7799 defines standards for specific domains along with a repertoire of controls that an organisation can choose from, which include security policy, personnel security, physical and environmental security, communications and operations management and compliance and auditing.

"With BS7799, ITeS companies will be able to demonstrate information security management and compliance by an independent security audit " - Rajendra Dhavale Consulting Director, Computer Associates, India & SAARC

Comments Rajendra Dhavale, Consulting Director, Computer Associates, India and SAARC, “With BS7799 in place, IT/ITeS companies will be able to demonstrate information security management and compliance by an independent security audit and certification process. This in turn will increase their clients’ comfort levels and confidence in outsourcing work to them.”

Even though network security vendors are offering end-to-end solutions, users prefer to take a multi-vendor approach. Sonata Software follows a multi-layered security process at gateway, server and desktop levels. It has a multi-brand approach when it comes to network security. “Some brands are good at the desktop level while others are best at the gateway. Even the patch management offered by each brand is different and hence our network security deploys the best of these making us less vulnerable to security threats,” adds Gururaja. Two-thirds of these companies have dedicated CSOs (Chief Security Officers), a higher percentage than in any other vertical. Polaris has a separate information security group that is distinct from its IT department.

“Data privacy and integrity concerns with regard to outsourcing are the biggest issues for an Indian BPO’s clientele. Especially for businesses that have IPRs (Intellectual Property Rights) to protect or for banks and other companies that maintain the confidentiality of their customer’s records. Compliance helps document all processes, which in turn increases efficiency. There is more to compliance than technology,” says Ross Wilson, Managing Director, South Asia and India, RSA Security. IT/ITeS is the only vertical where half the respondents prefer to conduct an audit every quarter. Vishal Dhupar, Managing Director, Symantec India says, “The frequency of reviewing IT security policies is higher in the IT/ITeS vertical because these companies have to demonstrate compliance to their shareholders. Most of them are listed on stock exchanges such as NASDAQ and are expected to be compliant with the Sarbanes Oxley Act and other regulations. Thus for them it is imperative to keep reviewing IT policies, ensuring regulatory compliance and reducing exposure to risk.”

Organisations recognise the need to centralise their data and security policies, backed by demand from India’s surging digital capacity and the growing use of the Internet. Niraj Kaushik, Country Manager, Trend Micro India and SAARC says, “ITeS organisations mostly serve more than one client at any given point of time. Though there are separate teams serving each client, it becomes imperative to segregate the information of each client from that of others. This requires segregating sections on the LAN and ensuring the best possible security.”

Mining data

For ITeS, BI is next only to network security on the IT priority list. George Varghese, Director, Pharma, ITeS and Mid-Markets, SAS Institute (India) says, “The hindsight, insight and foresight of data is important to monitor and plan for future in any business. In order to increase the operational efficiency, stay ahead of competition and comply with regulatory pressure, the IT/ITeS vertical is increasingly looking at investing in BI.”

Consolidating servers and storage

End-customers prefer physical segregation of hardware including servers and storage. Predominantly, IT/ITeS companies prefer NAS (Network-Attached Storage) rather than SAN (Storage Area Network). HP and IBM are the preferred vendors for the survey respondents. Shailesh Agarwal, Country Manager, Storage, IBM India says, “IBM carries a legacy and most of the end-customers from the US and Europe prefer an IBM platform. Moreover, we offer an end-to-end solution right from software, hardware to support and service. Given the rate at which this vertical is growing, NAS has been an apt storage technology as it helps in easy file-sharing and enables convenience in deployment.” The IT/ITeS sector is currently well-equipped with storage in the areas of e-mail archiving, disaster recovery tools and storage management applications. However, these companies plan to invest more in DR tools and e-mail archiving to take care of future needs. For as per SOX, any communication outside the business set-up has to be stored.

In order to consolidate and exercise better control and manageability, IT/ITeS companies have started investing in high-end servers and storage. Additionally, there are requirements coming from their offshore clients to protect data, have better security and ensure high availability. Says Avijit Basu, Country Manager, Marketing, Enterprise Servers and Storage (ESS), HP India, “The trend is to invest in automated backup solutions and large servers. Many IT/ITeS customers have found that using a file-serving facility such as NAS helps share large files across a group or region. Many of these have deployed 64-bit computing and Itanium-based servers and a virtual server and storage environment.”

Need for notebooks

The penetration of notebooks in the segment is rising with companies laying emphasis on quicker results and increased mobility. Currently, about 150 notebooks are being used at Sonata Software. The top management uses Blackberry looking at flexibility, mobility and easy access. About 500 employees at Flextronics Software use notebooks to access e-mail, ERP and HR applications and prepare sales presentations. Creating presentations, showcasing technologies and accessing mail are driving the adoption of notebooks and handhelds in large IT/ITeS companies. Few companies have a dedicated wireless computing policy for the usage of these devices. Polaris has such a policy in place to access corporate data. In 2004, a dozen notebooks were in use at Zenith. Now the requirement has scaled up. Chakrapani Gadudas, System Administrator, Zenith Infosystems says, “Driven by the need for comfort, convenience and mobility, the demand for notebooks is growing every year. The usage of PDAs has just begun and is restricted to the top management. About five handhelds are being used for managing data and scheduling meetings, this usage may increase in the near future.”

Outsourcing desktop services

"Companies are growing in terms of locations and customer-base. Hence, the need for help-desk and desktop services outsourcing" - Sumeet Sabharwal Vice-President, Global Delivery NaviSite Inc

The rapidly growing IT/ITeS companies are also on an outsourcing spree with regard to non-core activities such as help-desk and desktop services. Sumeet Sabharwal, Vice-president, Global Delivery, NaviSite Inc says, “These functions are easy to isolate as they are not mission-critical and have little or no impact on end-customers. Companies in this vertical are growing in terms of locations and customer-base. Hence, they have realised the need for increasing efficiency through help-desk and desktop services outsourcing.”

Rajeev Seoni, Assistant Vice-president, Head, IT, Flextronics Software says, “Since we are able to improve efficiency by outsourcing desktop and printing services, we are exploring to outsource other services such as support for ERP applications so as to increase productivity and quality.”

Security is gaining importance and it is becoming harder to recruit specialists in the network security domain. Vendors are coming up with lot of patches. Because of such growing complexities, IT/ITeS companies are increasingly looking at security outsourcing. Not entire security management but consultation on network security is being outsourced these days.

RoI on IT

The importance of IT for these companies is underscored by the frequency of IT audits conducted by them. Out of 12 respondents, 58 percent conduct an IT audit twice in a year. IT/ITeS is the only sector that measures the success of IT investments based on the increased revenue or profit followed by details such as timely completion of the project and at a reduced cost. IT audit is the key to understand loopholes. Audits on a daily and monthly basis are carried out to monitor bandwidth requirements and performance of mail servers. The Return on Investment (RoI) in IT is largely measured by the comfort for people and cost of the technology.

In future, IT investments in IT/ITeS will rise as these organisations provide services to other verticals. Hence, it is imperative that they invest more in IT.