Huge uptake in IT services spending among India SMBs: AMI

KOLKATA, INDIA: Small and medium businesses (SMBs, or companies with up to 999 employees) in India are on track to top US$900 million in IT services spending, including both product support and professional services. This is up more than 19 percent from last year, which is a similarly high growth rate from the year before.

This comes from the latest report by New York-based Access Markets International (AMI) Partners. Overall, the report found, long-term managed services are gaining strength even as traditional sectors like applications development and integration are losing traction. In India, managed IT services consist of end-to-end outsourcing, and discrete managed services. The latter dominates the managed IT services expenditure of SMBs currently.

“Managed IT services constitute a good chunk of the overall IT services package, which is growing faster than average market growth,” says Nirupam Chaudhuri, Research Manager with AMI Partners. “Managed services contracts, such as application and network management, desktop and server management and managed hosting services, are becoming mainstays for SMBs in India now.”

“In most cases, the primary point of contact for SMBs is the IT channel partner where a system/network integrator doubles up as the managed services vendor,” Chaudhuri says. “A good working relationship needs to be established first. The CIO or head of an SMB ideally wants to have a single point of contact while dealing with various issues related to IT infrastructure and facilities. Till now AMC (annual maintenance contracts) for hardware and software applications have constituted the bulk of SMB managed IT services spend in India. Gradually even annual maintenance contracts will mature into full-fledged discrete outsourcing deals, where the deal would entail risk sharing, 24/7 support and facilities management services.”

SMBs expect clear SLAs from services providers, including network uptime, adherence to SLA clauses, and fault-free integration with existing business and IT processes and applications. “Cost reduction, ROI and openness to out-tasking are becoming important driving factors for such engagements,” Chaudhuri says. “Routine desktop management services options have high traction and users are becoming selective while choosing the service provider. SMBs are also looking at speed of delivery, a standards-based approach, optimization of existing resources, performance measurement and proactive management before deciding infrastructure services contracts.

In India, the competition among vendors in desktop management and routine network management services is huge. The number of deals in applications management engagements – which entails SLA driven reactive/proactive application maintenance, applications optimization, upgrades automation services – is growing. There is also traction for FCAPS (fault, configuration, accounting, performance, and security)-based network management from service providers. The upper tier of MBs (companies with 100 to 999 staff) has begun availing NOC (network operation centers)-based remote infrastructure management facilities as well.