Remote Infrastructure Management : The Time is Now!

As IT becomes more and more strategic to business, most of the CIOs time is
now spent on devising solutions for business challenges. Leaving them with
little time to worry about the day-to-day running of the IT infrastructure,
which while crucial, is a non-core activity. This has led to a rising interest
in outsourcing these day-to-day activities to specialist service providers who
provide managed services.

Large enterprises in the US and Europe have taken a lead in outsourcing their
infrastructure management to companies like IBM, HP and EDS (now part of HP), or
even Indian IT services vendors like HCL, TCS, and Wipro. The model succeeded in
providing huge cost savings and increased efficiency, besides allowing them to
focus on their core business.

Talking about India, about five years back, larger organizations were
managing their IT infrastructure through a dedicated IT department, that was
initially created to provide services to internal customers. The only part which
was outsourced was the annual maintainable contracts primarily for hardware
related issues. No wonder, both MNC and Indian vendors saw an opportunity to
replicate their global success into the Indian market. Thus, infrastructure
management services started to take root, driven primarily by the telecom and
BFSI verticals.

Some banks however, chose to set up their own data centers and are still
reluctant to outsource infrastructure services to third parties. Security is the
key reason why they have chosen to own rather than outsource the hosting
capabilities. Companies were earlier following a break-fix model and called
service providers when they needed them. But now the outsourcing model is fast
replacing it.

These are all indications of the pressure that enterprises are under on
account of the current economic scenario and the likely impact on overall IT
budgets. The reality is that almost all verticals are feeling the pinch and CIOs
are busy strategizing to manage their costs better. This is contrary to the
situation in the last few years when IT budgets were on a high.

Within India, in the last 2 to 3 years there have been several
transformational outsourcing deals, which included the big bang ones in the
telcom space. Some of the leading ones included IBM (Airtel, Vodafone, and Idea
cellular), HP (Britannia, Godrej, Bank of Baroda), and Wipro (Maruti Suzuki, UTI
Bank, Aircel, Unitech Wireless). These were primarily IT transformation deals
which also included infrastructure management services.

The latest to join the bandwagon are Bharti Telemedia, which outsourced its
network management to Alcatel-Lucent for a whopping $500 mn. This was followed
by Unitech Wireless which has gotten licences to start mobile servies in
twenty-two circles,and is reported to have outsourced its IT to Wipro Infotech.
The deal is pegged at Rs 2,500 crore.

While opportunities in managed infrastructure services are huge, there are
many unanswered questions. Its fine to look at IT as not just a driver of
efficiency but that of growth. The models and pricing mechanisms should be
devised accordingly. And the vendors need to be ready to invest in understanding
the unique needs of Indian customers.

Sudesh Prasad

sudeshp@cybermedia.co.in