The Hindu Business Line : Worth a close-up

There's nothing distant about the remote management opportunity, it's happening here and now, and worth a closer look. A word of caution, though. It's a game for the big guys.

IT is a $1-billion opportunity that has the potential to shake the biggest IT names such as IBM and EDS. And, it can be the perfect "feel good" theme for the Government, not to mention that it can make the swadeshi lobby proud.

RIM might sound jargon to the lay person, but Remote Infrastructure Management is a concept that has been devised by the Indian companies to tap the $80-billion global market for managing the IT infrastructure of companies. And it has turned the traditional concept of Infrastructure Management Services (IMS) on its head.

"The Indian model of IMS does not involve buying assets but focuses on remote management of infrastructure using offshore resources. IMS will help Indian companies compete with multinationals for total IT outsourcing deals," says a Deutsche Bank report.

The traditional infrastructure management model evolved by international giants involves buying out the IT infrastructure of an organisation. The assets, along with the human resources, get transferred to the company. The Indian model is more flexible as it does not entail any transfer of assets. The service provider only provides engineers, both on-site and at a remote location, to manage the infrastructure.

IMS typically involves day-to-day management of server and storage hardware, network operations, meeting security requirements, desktop management (configuration, upgrades and maintenance) and running a 24x7 helpdesk.

Indian companies have continuously added new service offerings from development to packages, and Business Process Outsourcing. IMS is set to be the next growth opportunity for companies like Wipro, HCL Technologies, Infosys and CMC Ltd. IMS-related exports from India are expected to grow from $300 million at present to at least $1 billion in the next three years, the Deutsche Bank report says.

Large global customers in almost all verticals have already begun sourcing infrastructure services from India. These include Lehman Brothers, Farmers Insurance, AMD, Toshiba, Thames Water, Nike and NCR, says the report.

The RIM model being developed by Indian companies is more flexible, says Anant Gupta, the Chief Operating Officer of HCL Comnet, the fully-owned subsidiary of HCL Technologies that has been mandated to develop the market for remote management.

"The advantage of Indian companies is that they offer more flexibility than the international giants. Instead of binding contracts of 10-15 years, we are offering much shorter terms. Moreover, our model is based on co-sourcing, not complete outsourcing. That means that a composite team works remotely, with a few engineers providing on-site support," Gupta says.

The Deutsche Bank report says that Indian companies are able to offer up to 50 per cent cost savings. "Many end-user organisations have traditionally felt more comfortable with an onsite model.

But the service players, driven by cost cutting, are developing a hybrid model that will eventually become more of a remote management model. Industry sources indicate that the remote model can save more than 50 per cent of the infrastructure costs," it says.

Gupta says the cost advantage is in the region of 35-40 per cent, but the main drivers are quality of service and flexibility.

Agrees Wipro's Vice-President, G.K. Prasanna. "The main proposition is that it is a scalable, more available model. It offers a 24x7 maintenance and the quality of service is much higher. Cost savings is taken for granted. What is more important is that we can do it and there is significant value to be derived from the model."

Prasanna, however, adds a word of caution. He believes that it will only be the large Indian companies with a global reputation that will be able to take advantage of the growth in business.

"Infrastructure management is vastly different from application development. It is a real-time activity that determines the operations of the company. Nobody will take the risk of having their network down even for a small duration of time.

Also, there is a country risk involved in remote management. So while we have been able to demonstrate that we have the people with the right skills and we can deliver, it is not a field where anybody and everybody will generate business," he says.

Both HCL Comnet and Wipro have been selling the idea for the last five-six years and the results too are showing. HCL Comnet has 12 global and over 75 Indian clients. The business accounts for 10 per cent of the company's revenues and is growing rapidly. Wipro too says it has over 100 customers and its business has been growing at 25-30 per cent annually.

Other players like Infosys, CMC and Satyam have also realised the tremendous potential of the segment, but, according to the Deutsche Bank report, have a bit of catching up to do over HCL and Wipro that have already built a significant lead over their rivals.

gaurav@thehindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
When minutes matter

No bone of contention

Nurturing the small guy

Cyber money isn't guv's worry

Booting Linux

Problems with Internet Explorer

All in one dance

Worth a close-up

Choose your side of the road

Track the TRIO

Quiz

Breathe life into great ideas

Cartoon