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Indian IT: Infra. management comes calling
Jan 2, 2009

The Indian information technology (IT) industry has witnessed phenomenal growth during last two decades. The industry has carved a niche for itself globally by providing world class software development and maintenance services and Business Process Outsourcing (BPO) services. The industry is now poised to take advantage of a new opportunity which is emerging in the area of Remote Infrastructure Management (RIM). What is RIM?
Management of IT infrastructure needs of an organisation from a remote location is known as RIM. This constitutes management of networks, security, servers, storage device, applications, desktops and a 24/7 help desk. Earlier this need was fulfilled by in-house teams or local as well as large traditional IT services players. But now with the advent of new technology, RIM is emerging strongly in the global IT market.

RIM potential
Barriers to RIM industry have reduced over the past few years. There have been substantial improvements in third party engagement for managing infrastructure remotely. It is expected that despite the economic slowdown, RIM would emerge as a lucrative vertical for the Indian IT industry. As per the industry body NASSCOM (National Association of Software and Service Companies), India is well entrenched to capture US$ 13 bn to US$ 15 bn of global opportunity in RIM by 2013. Currently RIM services revenue for India stands at US$ 3.2 to US$ 3.6 bn.

As per survey conducted by Morgan Stanley & CIO, infrastructure & IT outsourcing is the segment which topped the list of most likely services to be sent offshore or to low cost destinations. This clearly indicates the untapped potential of RIM.

Service most likely to be sent to offshore location
Infrastructure & IT outsourcing 27%
New Custom Application software development 22%
Application Management 18%
System Integration / Testing 10%
Consulting 2%
Source: Morgan Stanley , CIO Survey

RIM is a mission-critical service that requires sophisticated tools and reflects high customer confidence and relationships. Given the leadership position of Indian IT and BPO companies, India has a substantial advantage over other offshore locations such as Singapore, Malaysia, Brazil and the Philippines. India-based software companies have scale and maturity, strong customer relationships, sound technical infrastructure, and ability to manage RIM services.

Indian IT companies are aggressively building their capability to address the growing demand of RIM vertical. For instance, Wipro acquired Infocrossing in 2007 in order to strengthen its position in the infrastructure management space. Others like Infosys, Mindtree, HP, and Patni have also set up focused infrastructure management divisions. HCL Technologies has built a facility in Noida to handle RIM for many global investment banks, pharma firms, and technology consulting firms.

By increasing RIM services, the Indian IT industry is moving towards becoming a fully integrated service provider. Another advantage that these companies will have is in terms of higher proportion of non-linear revenues in their over business. This will help them de-link their revenues with number of employees and in turn help in cost containment and margin improvement. Furthermore, this vertical is virtually recession proof for India as companies can postpone application development to save costs but they will have to manage their IT infrastructure, which can be done at lower costs by outsourcing to low cost destination like India. Amidst global slowdown, growth in this vertical can possibly help IT companies weather the slowdown.

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