After call centres and BPOs, remote infrastructure management (RIM) has become the latest trend in offshoring in India. With the easy availability of inexpensive, skilled and English-speaking personnel as well as ready infrastructure, India has become a preferred destination for IT offshoring. Industry experts comment…


What are the key growth areas in remote infrastructure management in India?

Sourabh Kaushal: Companies want to switch to infrastructure management services (IMS) so that they can focus on their core activities and remain competitive. Moreover, disasters like 9/11 in the US and 7/26 in Mumbai have forced companies to look into the importance of multiple locations for infrastructure and device relationship management centres. RIM effectively addresses these management concerns. A key growth area of RIM is support functions for managing and maintaining data centres.

V.M. Kumar: Indian companies offer a range of RIM services to global corporations. RIM is primarily about outsourcing management tasks while leaving the infrastructure intact. The growth areas are: remote server management, remote network management, database administration, service desk and remote desktop support.

Ameet Nivsarkar: The infrastructure management outsourcing (IMO) market has two models: IMS and RIM outsourcing. The IMS segment may be divided into network, systems and storage management. It is estimated that over 60 per cent of a company’s IT budget is allocated to infrastructure management. Typically, 75 per cent of it is for operational or “running” costs, including infrastructure and application management. Infrastructure spend is typically about 50 per cent of the entire running cost, including manpower, depreciation, asset maintenance contracts, software and hardware. It is estimated that 40-60 per cent of the overall IMS pie may be efficiently delivered through a global delivery model. This translates into a market potential (for RIM) of about $55 billion. The Indian RIM outsourcing market is likely to exceed $8 billion over the next five years, according to an Everest Research Institute report.

Nick Sharma: The key growth areas for RIM in India are: Level 1 support/helpdesk; monitoring and management of servers and network devices; remote desktop management; remote data centre monitoring/management; and technical support. These can be delivered almost 100 per cent offshore without much or any on-site presence.

How is the RIM scenario in India compared to other countries?

Sourabh Kaushal: Companies in developed countries have realised the importance of RIM. In India, a similar trend is observed among MNCs but not so among Indian companies. MNCs are quick in understanding the cost versus operational efficiency. We expect Indian companies to follow this trend too with issues of tight IT budgets, manpower (cost and turnover), and complexity arising.

V.M. Kumar: Infrastructure management the traditional way, that is, by using on-site resources, is getting complex given that infrastructure management is available 24×7, and a wide range of platforms are to be supported. The challenges are the same for global corporations and Indian companies ?? attracting and retaining talent. Global companies take advantage of India as an offshore destination through which they can manage this complexity at lower costs. For Indian companies, the cost reduction through remote management from within India is only marginal. But given the complexity of managing infrastructure, they will also adoptRIM in a big way in the future.

Ameet Nivsarkar: Offshore IMS is a logical extension of India’s offshore delivery capability and is a sizeable opportunity for Indian vendors. Several global service providers such as IBM, Atos Origin, Accenture, CSC, HP and EDS have already moved components of their infrastructure services delivery processes to India. Indian IT companies are also busy setting up infrastructure and investing in process maturity. HCL Comnet, Infosys, TCS and Wipro are among the leading Indian vendors offering IMS. The shift in favour of such offshoring is evident with the increasing number of infrastructure outsourcing wins by Indians.

Nick Sharma: The following factors differentiate IMS in India vis-a-vis the rest of the world.

  • Exchange rate: The exchange rate of the Indian rupee vis-a-vis major currencies (dollar, pound sterling, euro) undervalues the rupee ?? a cost advantage for these countries. It is likely that the rupee appreciation trend will be slow and steady over the long term, which may not alter the economics of the offshore model.
  • Cost of living: There is room for salaries in India to become more competitive in response to global entry.
  • Wage differential: Rising wages leading to high attrition levels are worrying factors not only for Indian IT leaders but also for US clients. Almost everyone is on a hiring spree, wanting the right talent at the right time. The upshot is that each one is engaged in talent poaching.
  • Availability of personnel: There is the availability of skilled, certified, trained English-speaking personnel, who are more suited for “operational jobs”, given the education system in the country. The vast population backed by many educational institutions is a continual source of supply of literate manpower.

    How does RIM benefit a company? What are the challenges that Indian infrastructure management vendors face?

    Sourabh Kaushal: Some important benefits of RIM are 24×7 availability of IT infrastructure support. This reduces operational costs and takes care of resource issues and technology advancements. Moreover, IT efficiency increases as the infrastructure is managed by professional and more experienced IT service providers.

    The main challenge of the Indian infrastructure vendor is the mindset of the outsourcing organisations. They are not secure enough to outsource and there is need for an on-site resource as complex problems can only be resolved there.

    V.M. Kumar: The main benefits to companies are:

  • Being able to manage large and complex infrastructure better.
  • Better standardisation of processes through IT infrastructure library framework.
  • Ability to redeploy key resources to strategic functions rather than day-today infrastructure management.
  • Better accountability and service level agreements through outsourcing, compared with in-house options.
  • Cost reduction of up to 50 per cent through offshoring.

    Some of the challenges faced by Indian vendors are:

  • Large Indian vendors are still catching up with global vendors in sales, marketing and client acquisition.
  • Mid-sized Indian vendors like Sify need a larger footprint in international markets. They are creating this, and gaining more visibility.
  • None of the Indian vendors is offering advanced performance management services as an integrated approach to infrastructure and application management.

    Ameet Nivsarkar: Organisations that aim to become truly global entities need infrastructure that allows virtual management and smooth information sharing. A well-integrated infrastructure, for example, allows an organisation to securely store and move data at will. The key factors influencing a company to invest in RIM are:

  • Cost effectiveness: It is more cost effective for companies to hire the services of an offshore IT vendor who has the infrastructure and a dedicated and skilled team compared to building an inhouse infrastructure management system and investing in a team to execute it.
  • Technology upgrades: Since technology is dynamic, it is not only expensive but also time-consuming to keep IT infrastructure up to date. Hence, it is prudent to outsource infrastructure management to a third-party vendor whose core competence is technology so that the company can focus on its core business.
  • Human resources: Hiring, retaining and managing skilled IT staff is difficult for companies whose needs are restricted to maintaining smooth functioning.
  • Availability: RIM, with its dedicated team, ensures that infrastructure is monitored, managed and rectified in case of any problems, and upgraded 24×7.

    Nick Sharma: In the current global scenario where remaining competitive is vital to the survival of corporations, RIM centres provide a major competitive advantage. Companies like Satyam have wide experience in providing systems and support solutions to a variety of global clients. Access to high quality and low-cost technical manpower and resources has allowed global corporations to cut down on their systems and infrastructure management costs. It has also significantly reduced their time-to-market.

    Some important benefits of RIM are:

  • High quality, cost-effective maintenance and support services to global clients.
  • Reduction in infrastructure and systems support and maintenance costs while ensuring high quality output.
  • Provision of a strategic opportunity to clients to make the most effective use of remote IT resources.
  • Enabling global companies to be more competitive by accessing high quality talent at very economical rates.

    Some of the challenges faced by Indian infrastructure vendors are:

  • Cultural differences: There is a cultural barrier hindering us from picking up the outsourcing momentum. Clashes in terms of different language, culture and work practices make collaboration with clients a challenge.
  • Business knowledge: American and European clients have found offshoring not always value creative due to a mismatch between the IT capabilities of client companies and those of the offshore vendors.
  • Communication: With client and vendor teams being thousands of miles apart, voice communication remains a critical tool to carry out daily business. Often, cultural differences and an absence of professionalism prevent a vendor from rising to the occasion.

    How can domestic vendors fend off competition from global vendors?

    Sourabh Kaushal: Indian vendors have a competitive advantage over global ones owing to their process maturity and experience in offering IT services from a remote location. The same could be replicated for IMS as they already have the required infrastructure to offer these services and there is a cost advantage.

    V.M. Kumar: Currently, Indian vendors continue to play the cost-arbitrage game. But this will be short-lived as global majors are all ramping up their offshore presence in India and becoming more competitive. Indian vendors will therefore be forced to compete on better process capability, value-added services and flexibility in engagement models. Global majors, in particular, are known for their lack of flexibility, which will be a key factor in favour of Indian vendors.

    Ameet Nivsarkar: The road ahead is tough as the offshoring space has been dominated by global giants and Indian players currently do not have enough reference customers to make a larger impact. There are three approaches in the IMS space: on-site facility management, offshore management and a hybrid approach comprising 20 per cent on-site and 80 per cent offshore. Most Indian vendors have started with an on-site model and then moved services offshore. In fact, several Indian vendors are now building on their global delivery capabilities to facilitate balanced on-site and offshore service delivery. This helps make an entry into new accounts by giving the client confidence in outsourcing their infrastructure management requirements.

    While most projects may come to Indian vendors on a price basis, it is vital for them to create other differentiators as well. The key lies in showcasing hidden costs (for example loss in productivity and revenues due to downtime) in managing a network, enhanced service levels, and improved productivity as problems are solved in a proactive rather than a reactive manner. The success and scalability of a process lies in the establishment of robust standards.

    Nick Sharma: The offshore economics are as follows:

  • Process maturity, proven standardsbased delivery framework, adherence to global best practices and service delivery frameworks like ITIL, and compliance with global security standards like IS 27001 provide a high degree of reliability and authenticity to the capabilities of Indian IT vendors.
  • On the cost front, Indian companies have a huge advantage. The fact is that despite the big offshore centres that MNCs have built, they still have a huge number of high-cost employees based in the US and Western Europe.
  • The ability to ramp up the workforce count is a huge factor heavily weighing in favour of Indian companies. Statistics show that though MNCs have the brand name, in the area of employment, India, Inc. is way ahead in terms of brand recall.

    Does India have the potential to become a major destination for offshoring IMS?

    Sourabh Kaushal: India, a reputed player in providing IT services, holds a clear advantage over other outsourcing locations. It is also above par in terms of offering cost competitiveness and availability of a large pool of technical resources critical for RIM. RIM is to be the next big IT trend and India is bound to become a global hub for offshoring IMS.

    V.M. Kumar: Undoubtedly, yes. The traction is good for all companies in this space, and the rate at which global companies (especially in the US) are adopting offshore infrastructure management is very exciting.

    Ameet Nivsarkar: Indian players have realised that, compared to software services, the IT IMS space is tougher to crack as most clients are reluctant to hand over control of their networks to outsiders. Also, unlike application development, infrastructure management is a critical issue where even minutes of downtime can cripple a client’s business management. However, India is well poised to grab this new opportunity. Some of the factors favouring India’s case for RIM are:

  • The increasing trend towards selective “asset-light” IMS, which is opening up the market for Indian vendors.
  • Higher reliability and lower cost of telecom connectivity ?? an essential element in remote IMS delivery ?? are increasing the viability of using Indian vendors.
  • As hardware costs are fast approaching global standards, customers are laying more emphasis on managing operating costs, a large part of which is labour cost.

    These are significantly lower in India, making it a competitive differentiator.

  • Indian vendors lack a head-start in the application development and maintenance space. But though global players have the benefit of experience and seemingly superior techniques, Indian vendors have an advantage in terms of process maturity in offshore service delivery.

    However, in India, there is a higher risk perception of offshoring IMS to global vendors. Though they have the resources offshore and experience to offer this service, they do not have the references to show capabilities for support primarily through remote offshore centres.

    Nick Sharma: India will continue to be the destination of choice for application services. This will be not just owing to lower costs. India’s IT powerhouses have left onshore global providers struggling to adapt. Forrester Research predicts that about 3.3 million US jobs in the services sector and $136 billion in wages are likely to move to countries like India, Russia, China and the Philippines by 2015. India leads the pack, and the gap between India and China, the second largest offshoring market, is huge. India is already a major offshoring destination for applications and BPO. This maturity enables the industry to offshore infrastructure, which is similar in nature. For instance, Satyam has been a pioneer in RIM services, and has been offering offshore infrastructure services since 1999-2000.