SERVICES: Skilled Strokes, Superior Score

Name every service you can think of–software development, networking,
infrastructure and facilities management, IT-enabled services... All of them
went up the maturity curve, quite remarkably and distinctly. In particular,
network integration evolved from being a product-margins earning industry to one
concentrating on value-adds in terms of network design, planning, consultancy
and other related services. Having implemented enterprise-wide solutions such as
ERP and automation of workflow and systems management, integrators were busy
doing projects on Web-enablement and supply chain management.

Even amidst talks of slowdown and the urgency to cut costs and focus on RoIs,
orders kept flowing in. Banks were keener to automate their billing processes
and e-enabling other services; stock exchanges and financial institutions found
it imperative to cater to online trading needs of investors, and corporates
inferred that customer-oriented services such as CRM and call centers had
increased in importance. Many projects were scale-ups on the last years’
implementations, or aimed at leveraging applications and services on previously
built WANs. The network integration space alone grew at an impressive 64% to
reach a total sales revenue of Rs 1,675 crore.

Systems integrators too made serious bids to incorporate high-end
technologies like Java and do other value-adds in their offerings. Enterprises,
especially in the financial and banking segments are keen on moving up the
technology ladder.

Key projects

Among large network integrators, Wipro Infotech with over 200 projects,
emerged at the top with sales revenue of Rs 270 crore. 01markets, Wipro’s B2B
e-marketplace, was able to identify as many as 80 IT services, ranging from Web
designing to ERP implementation, as its areas of operation. A highlight during
the year for the company was the Rs 13.5-crore order that came from Central
Board of Excise and Customs to supply, install and commission an e-commerce
gateway on a turnkey basis. The exchange will be an attempt to bring together
the fragmented market of service providers across the country on a common
platform.

Another leading network integrator, Datacraft India, also successfully
completed the integration of an Internet telephony network for Xerox India and
an IP contact center for Spectramind. HCL Comnet bagged projects from SBI, Bank
of Madurai, Indian Bank and the National Stock Exchange. Among other large
orders, HCL Infosystems won a deal from Indian Overseas Bank to implement a WAN
connecting 200 branches across 11 cities. The company’s revenue from services
alone in H1 of 2000-01 grew by 50% as against H1 of 1999-00. It also secured an
order to develop a WAN for the Bank of Rajasthan, involving networking,
security, facilities management, and integration services.

Tata Infotech, which is trying to further strengthen its position, made its
software distribution division a part of the integration business. The company
bagged major orders including those from the Ministry of Defense and the Central
Ground Water Board.

More services, new entrants

The year also saw the launch of new Internet data centers-based services,
which eroded some VSNL monopoly, the de-facto IDC before. Reliance Infocomm,
Cyquator, Netmagic, Global Telesys-tems, Asianfrontiers.com and Satyam were
among the top ones. These players are offering services like server hosting,
e-mail forwarding, auto-responders, POP accounts, bandwidth and virtual hosting
support. Satyam tied up with Intel to launch value-added services, aimed at
large and high-traffic e-business through its enhanced data center in Navi
Mumbai. The system provides a comprehensive infrastructure that will enable
Satyam to provide, monitor, measure and track each application it offers.
Eventually how popular these services become will depend on the bandwidth
situation in the country.

A number of non-IT majors entered the industry with a range of IT services on
offer. The Rs 4,000-crore Hero Group, for instance, expanded into IT with plans
for CRM and software service solutions. The group invested Rs 13 crore in buying
a stake in FirstRink, a US company specializing in call centers. It plans to
spend another Rs 150 crore in setting up customer response centers and software
development centers. HDFC and TCS set up a Rs 40-crore company with a 50:50
partnership to provide IT-enabled services to overseas companies. The venture
will offer services like online information, help through call centers,
relationship management, back-office data processing and administrative
accounting.

Outlook

Many state governments have come up with IT-friendly policies. Most of them
plan to increase the role of IT in their own functions and this is likely to
accelerate the growth in services. With disinvestment in the offing, many public
sector undertakings also provide abundant opportunities for IT companies.
Public-sector major CMC is already bullish about such opportunities. It will be
leveraging its existing implementations in public sector undertakings.

The key trend that is emerging now is complete outsourcing, as corporates are
finding the model more cost-effective and efficient. The services sector is all
set to hog the limelight as vendors move up the value chain. India’s core
strengths in providing low-cost manpower and huge pool of tech professionals
will come handy as they do so.