Services: Not Quite at Home

Brand India needs no introduction to the Western world. It's not just the
Fortune 1000 genre, but even midsize businesses and startups that turn to India
for offshore, and often outsourced, services. And while half our tech exports
revenues still come in from financial services (tech and BPO) and products,
there's a good range of services on offer from India now.

The story remains a bit different within India.

On one hand, services did make up a substantial 33% of the $11.8bn (once
hardware-dominated) domestic IT market in 2005-06. Though its growth was way
less than that of hardware or software, it's now a huge base and a big driver
for IT business. And it becomes bigger if you add all the hardware and software
supplied as part of those contracts (DQ doesn't count them). The customer's
capex has moved to op-ex: from products, to scalable services.

On the other hand, the services sector is far from well-charted-out. The
areas evolve so fast, services companies, SIs and VARs, struggle to keep up.
Smaller businesses can't easily find suppliers. Few vendors have yet made big
businesses out of servicing SMBs, though that number is growing rapidly in 2006.
And BPO is another story...the world's BPO supplier doesn't have much supply
for companies at home.

For Dataquest, the most frequent queries today are no longer about products
or their vendors. They're from CIOs and IS managers looking for services.
These emails and calls are increasingly from midsize businesses. “Who are the
top five ERP solution providers in our region?” “We can't find a managed
email service provider...” “Your so-impressive DQTop20...doesn't even tell
me which vendor can manage our network.” “We want to outsource product
support, and DQ doesn't even have a Top 5 list of call centers in the
North?” (Yes sir, we do, but they don't want your business: they're
exports-only...)

And yet our channel publications get so many queries from resellers who want
to sell services to enhance their margins: from network management, wireless and
voice to applications and product development.

There's clearly a gap between supply and demand, between what's available
and what's visible and accessible.

That's why we changed this DQ Top 20 Volume 3 completely, as a step toward
bridging the gap, with a list of suppliers of specific services across the
regions.

But this is a small step. It's a long road before we can answer half the
questions from across the spectrum of enterprises. Especially the growing,
services-hungry midsize enterprises. What services? Which supplier? What SLA
norms? What penalty clause, how do we enforce it?

And we haven't even touched the SMB segment yet.

There's a long way to go before the domestic services industry matures. And
this is a path lined with opportunity.