The same forces that made India a name to reckon with in the software services industry are now coming to the fore again in the managed network services area

An increase in quantum of international bandwidth, in addition to India’s ability to provide skill sets at lower costs means India is set to emerge on the global IDC landscape in a big way, says Avinash J

The story is the same, with only a slight change in the script. Indian players like Wipro Net, Satyam Infoway, Datacraft, Microland, CMS, HCL Comnet are all now jumping on the managed network services bandwagon—which many analysts believe is the next big opportunity for India Inc. after software services. And unlike the software services sector where there is no real presence of a domestic market, the players in the managed network services space have seen encouraging signs of huge growth in the domestic market.

For instance, when banking giant State Bank of India recently announced its recent Rs 500 crore IT blitz, the one thing that stood out in the bank’s ambitious plan was the outsourcing of its key requirements to strategic partners. A critical part of SBI’s seven IT initiatives—the task of networking and maintaining more than 1,500 branches and approximately 3,000 ATMs in 49 cities was given to Datacraft India. Just some months ago, Bank of India too adopted a unique approach when it signed a deal with India Switch Company to set up and maintain a 300-strong ATM network. These two contracts simply affirm the network outsourcing wave which is catching on in a big way. And if you thought only PSU banks were outsourcing their requirements in terms of managing their networks, think again! Private sector players like Thomas Cook, Exide, Hero Honda, Shoppers Stop and Pidilite are all availing the services of players like a Comsat Max or a Bangalore Labs or NetMagic to manage their heterogeneous networks.

The need
As organisations look to expand and also consolidate their strengths, networking has undoubtedly become a critical part in a company’s growth strategy. But as newer technologies keep on emerging and branches are added on at a frantic pace, the task of maintaining such networks becomes a Herculean task. Faced with the complexity of networks on one hand, and shortage of staff on the other, in addition to the threat from competition, Indian corporates are actively looking at outsourcing the task of managing their networks. It is a win-win situation for corporates as outsourcing network management services makes IT costs predictable, making it easy for CIOs to pay on a monthly basis rather than paying up front for a technology—the choice of which may backfire later.

Key Trends
Though the industry is going through one of the worst times in history—with a significant number of projects halted midway—the positive outlook towards outsourcing of network management services has spurred a plethora of players to jump on this bandwagon. While network management services are nothing new, what is changing is the criticality and urgency of having a good management model being adopted rapidly by both public sector and private players.

The concept of annual maintenance contracts has also undergone a huge change with service providers gradually moving up the value chain. Right from providing basic services like monitoring a network, analysing traffic, identifying bottlenecks and maintaining 100 percent uptime, network management service providers are moving into providing a full range of services like intrusion detection, performance management, VPN, PKI, managed firewalls, helpdesk and storage on demand. For example, Comsat Max, a leading player in the VSAT space, is now looking at leveraging its expertise in the VSAT space to the managed network services space. In addition to designing the appropriate network and managing the network by the use of parameters like usage, security and analysis, the company even obtains necessary approvals from the regulatory authorities.

Customer preferences are also changing rapidly and have become more demanding. To ward off competition, players are now focusing on providing more value-added services. Says Sharad Heda, director, business operations, Microland, “A process-based approach focused on end-user expectations and satisfaction is increasingly the norm, as against the models of the past that just had a bunch of technical engineers hired to provide onsite maintenance for network infrastructure. The addition of a customer, for instance, could mean a change or addition of a process and therefore there is a need for the continuous services of a process consultant who defines and audits the validity of processes from time to time.”

Skill sets in demand
While corporates today are keener than ever to outsource their network management needs, there are some specific skill sets that are in huge demand. For example, in addition to basic network services management, pure play companies like Bangalore Labs are looking at managed security services as an area of big growth. Also in demand are Wide Area Networking (WAN) skills. Industry sources say that unlike LAN skills, WAN skills are relatively scarcer simply because it takes an engineer more than 4-5 years in a large organisation to gain sufficient expertise in running a network on his own and obviously many more years to manage it.

Sharad Sanghi feels that as the rates of bandwidth come down, Indian IDC players can increase the ratio of value-added services

Onsite or remote management
The resident engineer concept is still the preferred model for Indian corporates, with remote management finding low acceptance. And the reasons are not hard to fathom. One, traditionally customer data-sensitive industries like banks, insurance companies and financial institutions prefer the onsite model since they want to have the comfort feeling of onsite secure control over their networks. In addition to the familiar problem of infrastructure, there are not many service vendors who are actively advocating the use of remote management.

Though the preferred model is still onsite, service players are excited about a small but encouraging trend that shows increasing acceptance of a hybrid model, which combines remote management with committed support. Industry players believe this hybrid model will eventually move on to a true remote management model. Some companies have already subscribed to the remote model since they can save close to 50 percent of infrastructure management costs compared to the onsite model prevalent today.

Indian IDC sector
Internet Data centre (IDC) players too are playing a big role in the managed network services space. And with bandwidth rates coming down like there’s no tomorrow, the dominance of IDC players in this space is increasing day by day. Says Sharad Sanghi, CEO, NetMagic, “As the rates of bandwidth are coming down, Indian IDC players can increase the ratio of value-added services. This is where India scores over the rest of the world since we have the labour arbitrage advantage, which is a very high degree of skills at globally competitive rates.” With technical skill sets in India available at one-sixth of the costs abroad, Indian IDC players finally feel they can compete at par with global players. The ability of Indian IDC players to offer cost advantages without compromising on quality holds the key, especially for foreign clients.

Adds Avinash J, president, Satyam Hosting, “In developed economies, essential services like space and bandwidth are affordably attractive, whereas tariffs for value-added services are extremely high. This is primarily on account of the human skill sets involved and the premium they command. Therefore, with market economies operating in India for bandwidth, with an increase in quantum of international bandwidth in addition to our ability to provide skill sets at lower costs, India is set to emerge on the global IDC landscape in a big way. In fact, we feel India will soon emerge as the preferred destination and will create a brand image for itself in the same way as seen in the software services space.” While India has a well known ‘software services’ image, the same brand can be replicated in the ‘managed network services’ space if Indian players play their cards right.