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Companies that rely on India for applications development and maintenance are now looking to ship out another chunk of their IT tasks to the Asian powerhouse: the care and feeding of their infrastructure.
"Clients are starting to ask, 'If my Indian vendors can take care of our applications, can they take care of my infrastructure as well?'" said Gartner Inc. analyst Rich Matlus at the recent Gartner conference on outsourcing in Orlando, Fla. The area is a hot topic in outsourcing circles, and why not? The potential economic upside is huge for client and provider, according to industry experts. Merrill Lynch & Co. pegs the market for managing infrastructure services from remote locations at $55 billion globally. Companies, in turn, could save as much as 40% by offshoring infrastructure management services. Merrill Lynch defines infrastructure management services as monitoring and managing a company's IT backbone. Tasks include IT infrastructure assessment, technical help desk support, data center management (including sever, mail and database management), network management and security management. According to a recent report by Cambridge, Mass.-based Forrester Research Inc., interest from businesses wanting to send infrastructure support to India is rising. The technical hurdles Indian providers have overcome to become the vendors of choice for inexpensive application development work have paved the way for this new market.
A few years ago, the Indian vendors' lack of experience in this field made it a high-risk proposition. A number of factors, including the maturity of management technologies such as CarbonCopy and Windows NetMeeting, are making outsourcing infrastructure tasks to low-cost locations a "much safer and more realistic activity," Forrester reported. Another factor in its growing appeal is the dramatic decrease in the cost of bandwidth and the increase in bandwidth reliability. "As more and more work started going offshore, infrastructure management became important in India," said Atul Vashistha, principal of neoIT, a San Ramon, Calif.-based consulting firm specializing in global outsourcing. Indeed the seeds of India's growing expertise in infrastructure tasks were sown by local companies. "With a company like Wipro reaching 15,000 to 20,000 people, you have a lot of people with desktops who need desktop support services. That was what got it started." Vashistha predicts the demand from U.S. companies will be strong for certain tasks. "Help desk support is probably the least valued function in the IT group in the United States. In an offshore location, you can put more people on for less money, and because of broadband networks you can do things like virus protection and updating software remotely," he said. Network operating centers, which monitor the network for usage and capacity, can also be located offshore. On the other hand, "you're not going to see Bank of America put the data center in India," said Vashistha, nor does he advise companies to do that. "If you're doing infrastructure offshoring, first start with the service aspect. And whoever you go with, make sure they can demonstrate deep capability; this should not be an experiment for the vendor." Among his firm's top picks for infrastructure services management are HCL Comnet Ltd., SIFY Ltd., Tata Consulting Services Ltd. and Wipro Ltd. Matlus, of Stamford, Conn.-based Gartner, agrees that companies can reap real costs savings from going offshore but cautions the risk is also greater. "Using Indians for application support is another matter from using them to monitor the network. If their network goes down and you get an application at 8:30 a.m. instead of 8 a.m. it's no big deal. But if their network goes down while they're monitoring your network, that half-hour could spell disaster," Matlus said. He said he is also hearing "mixed reports" on going offshore for help desk services, with clients complaining about problems with accents and resolution rates of 40% and 50%, compared with the 70% now common in the U.S.
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