EAI, new opportunity for Indian IT industry

Robin Elsham

MUMBAI: Indian information technology companies, searching for ways to diversify into high-margin, fast-growing areas, were urged on Thursday to enter the growing field of linking companies' different systems.

Along with areas like IT-enabled services, covering call centres and accounts processing, the enterprise application integration (EAI) market presents a huge opportunity, said Baru Rao of Syntel Inc., a Troy, Michigan-based IT consulting company.

"The market for providing enterprise application integration services is one of the fast growing areas of the IT industry," Rao told the National Association of Software and Service Companies (Nasscom) annual seminar in Mumbai.

Over the years, companies have spent fortunes installing computer systems and software applications to run their businesses. But now companies are having to spend even more to get those systems to communicate with each other -- and with their partners' and suppliers' systems -- to carry out everyday business tasks such as invoicing, inventory checking and billing.

Internet research firm Forrester estimates that the top 3,500 global firms will spend $22 billion on integration software and services both this year and next. The same report said 27 per cent of that money would be spent on software, and 30 per cent on IT labour and outside consultants.

The remaining 43 per cent is budgeted to be spent on internal staff. Rao said Indian IT companies could even grab a slice of that money with "an effective cost/competency mix".

Industry layout

Rao said EAI has evolved rapidly, and is currently dominated by BEA Systems Inc, IBM and Sun Microsystems Inc's iPlanet. On Monday, Microsoft Corp, seeking to make a bigger name for itself in the B-2-B field, launched an updated version of its own EAI software, BizTalk.

Microsoft claims its BizTalk 2002 is much cheaper to buy and quicker to install than rival products. On average, integration projects, using software from companies like TIBCO Software Inc and webMethods Inc, cost $750,000 to $1.5 million, according to Dave Wascha, product manager for Biztalk.

By comparison, Biztalk 2000 costs $100,000 and does not take an army of high-priced developers to implement, making it an option for smaller and medium-sized companies.

Rao said the entry of Microsoft into the field was "queering the pitch," but suggested huge potential existed for filling the need for providing consulting and customized solutions in the EAI field.

(C) Reuters Limited.