Growing complexity of business networks spells high growth for Networked Infrastructure Services, says IDC

By : |October 31, 2001 0



The Networked Infrastructure Services Market, which comprises of
‘Network Consulting and Integration’ as well as ‘Network and Desktop
Outsourcing’ services, is expected to see a growth of 25.8% in current financial year
over FY 2000-01. Considering the general slowdown, this growth can be termed as healthy.

The findings are based on a massive survey by IDC wherein 1553 PC
owning SME and 129 PC owning large organizations, across top 8 cities of India, and over a
dozen leading IT service providers were surveyed. The results of the survey, contained in
a report titled ‘Networked Infrastructure Services Market in India: 2001’,
indicate that spending on Networked Infrastructure Services was Rs. 753 Crores in FY
2000-’01 and this is likely to increase to Rs.947 Crores in current fiscal,
indicating increase in its share from 15.3% to 16.4% of total IT Services spending.

The prime reason behind this growth is the fact that:

More and more organizations are deploying inter-organization and
intra-organization networks which coupled with a fast technology refresh rate lead to a
situation where heterogeneous hardware & technical environments are often found on the
same network.

This increasing complexity of networks demand services of professional
‘network integrators and consultants’ to build and ‘network and desktop
outsourcing service providers’ to maintain and run the same. The captive IT service
departments are no longer able to sustain these challenges, thereby forcing the
organizations to outsource these activities.

Banking/ finance is one of the biggest adopters of such services. Both
private as well as public sector organisations, are setting up more and more ATM’s,
thus providing customers with any-time-any-branch banking services. This means that they
not only have to hire a professional Network Consultant and Integrator, but also to
maintain the infrastructure, they have to depend on a service provider.

Some other trends identified in the research report include:

There is a clear shift away from simple ‘Annual Maintenance
Contract’, wherein the responsibility of service provider is limited to repair the
specific device that’s malfunctioning, towards more complex ‘Facilities
Management’, wherein the service provider is responsible for managing the complete
‘IT show’ in an organization including IT helpdesk, vendor management, asset
management, preventive and predictive maintenance, network optimizing and tuning,
guaranteed minimum service level agreements.

IT service providers have not only started to customize the service to
suit very specific needs of their customers, but also are focusing on extending their
geographical reach across the length and breadth of the country, even in remote locations.
Another interesting development pointed out in IDC report is the fact that the service
level agreements are changing from merely defining the acceptable service standards to
incorporating risk/ reward sharing clauses.

In order to remain competitive, IDC feels that the IT services
providers have to gear up to take care of the following two key success factors:

competency to provide plethora of services across vast geographic
spread

shifts in business model from providing services with pre decided SLAs
to partnering with the client organisations and share the business risk/ rewards.

Definitions:

Definitions of some of the key terms used in the study:

Small Organizations: Organizations having
upto 49 permanent and non-manual employees.

Medium Organizations: Organizations having
more than 49 but less than 500 permanent and non-manual employees.

Large Organizations: Organizations having 500
or more than 500 permanent and non-manual employees.

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