According to a recent research by Forrester, total addressable managed services opportunity in India will be worth $8.27 billion by 2013, growing at a CAGR of 19%. 

IDC, in its India Managed Services 2008-2012 Forecast and Analysis, has reported that the Indian domestic managed IT services market is expected to grow at a compound annual growth rate (CAGR) of 24.9%, to reach a US$2.78 billion industry in 2010. The Indian Managed Services market is poised to become one of the fastest-growing markets in the Asia-Pacific region.

According to Ovum, the global managed services market is expected to reach US$41.5 billion per year by 2010. "In India, the emergence of Managed Services is not just because of the cost advantages, but also because of a strong realization of the benefits of specialist organizations that can deliver business and service outcomes," says Vishwanathan Shankar, Vice-President, Applications Services, CSC in India. According to Vishwanathan Shankar, currently the Indian managed services market stands at US$1.6 billion and is expected to grow to US$3.8 billion by 2013. 

In fact, according to Girish Krishnamurthy, Managing Director, Kaseya India, a leading provider of IT Automation Software, the size of the managed services market is too humongous to estimate. "If you just look at all the computers in the large, medium and small enterprises, they all require managed services, so that is the market size," says  Girish Krishnamurthy. 

"In India, there are two managed services market spaces we serve - enterprises that are India-focussed and those that are globally-focussed and those who outsource their IT or planning / IT infrastructure management to India. The outsourcing market is expected to be around US$26 billion in the next three years and a major chunk of this will be garnered by the top 100 international SIs/SPs and large software companies such as TCS, Infosys, etc. 

The Indian market is expected to capture a very small pie, but what remains totally untapped is in terms of managed services. Telecom has become economy mover in the country. Hence, it becomes important that services are efficiently and cost-effectively managed. "RailTel is also, thus, seriously looking at MSPs to provide efficient services, as the business sphere grows," says Anshul Gupta, Group General Manager, RaiTel Corporation of India Ltd.

"We are working on developing a platform, wherein MSP provides us a comprehensive MS support right from O&M of OFC cables, AMC of active infrastructure and also NOC support," says Anshul Gupta.

Under MSP, win-win is very important. Hence, if due to efforts of MSP we earn more or less, he should also be compensated accordingly. "Hence, for a telecom infra company both in the active and passive domain, a correlation between the topline and MSP payment is important," says RailTel.

Further, in tower infrastructure wherein due to pressure of rollouts, Telcos are more concerned about tight targets, we need to be ready with these sites. Thus, an important role for MSPs.

"We expect large business volumes in 5-8 years in India due to the increasing PC penetration and importance of application management, performance management and automation which would be the future. So, I expect the Indian market to be at least worth US$5 billion with the global market at US$20 billion on managed services," says Girish Krishnamurthy.

"India presents huge growth opportunities for MPS as large businesses continue to use paper and traditional means of storage and there is an increased need for automation within enterprises. IDC predicts that enterprises spend 10% of their revenues on document products, management and distribution," says Vipin Tuteja, Executive Director, Marketing, Business Support & International Business, Xerox India.  

Notwithstanding the divergence of opinion on the managed services market in India, one thing is quite certain. The future of managed services looks bright. It is being well received in India. The Indian market offers a huge opportunity for managed services.

According to Vikram Sharma, Vice-President, SP, Cisco India & SAARC, key triggers for managed services include the emergence of new data technologies, convergence of voice, video, and data. All these have resulted in corporate networks dramatically changing and becoming increasingly complex.

Businesses so far have followed a "Do-It-Yourself" model in consuming technology - high upfront spending on CapEx, high OpEx and taking on significant risk of technology obsolescence.

"However, companies are now realizing the importance of having tasks such as provisioning, implementation; configuration, support and ongoing operations managed by an outside party that specializes in these functions. Hence, they have started outsourcing these services, while concentrating on their core area. This trend has led to a revolution in the managed services offerings, with managed network services (MNS) forming the foundation," says Vikram Sharma.

Advantages of Managed Services

The advantages of managed services can be enormous. The managed services model is cost-effective because it offers enterprises a way to make the most of their capital by fulfilling their IT needs on a pay-per-use basis.

According to industry experts, opportunities can be found in tried and true areas such as storage and data security. "India presents huge growth opportunities for MPS as large businesses continue to use paper and traditional means of storage and there is an increased need for automation within enterprises. IDC predicts that enterprises spend 10% of their revenues on document products, management and distribution," says Vipin of Xerox.

"Increased cost of infrastructure, continuous upgradation on technology to drive efficiency also poses a degree of complexity, which again can be best managed by equipment provider. In order to drive efficiency out of installed infra, sharing will continue to attract attention, and while passive sharing has been around, we will soon see some limited active infra sharing, and that also can be best done under managed services provider's umbrella," says Shishir Kumar, Sr. Director, Services, UTStarcom.

"And for equipment providers, it, in some fashion, helps put forward additional value proposition, that is bundle of products and services, enabling higher revenues over a period of time, extended lock-in and maybe better margins," adds Shishir of UTStarcom.

Managed Services for SMEs 

Going by the recent trends, it seems that managed services are no longer the preserve of large organizations as SMEs are looking to this model to lower costs.

As a matter of fact, those who don’t have the manpower, equipment or experience to build out their IT offerings are prime customers for the services of an MSP.

An increasing number of small- to medium-sized enterprises (SMEs) in India are coming to grips with managed services model, thanks to its ability to cut costs and reduce the need for capital equipment – both hardware and software. The reason for growing adoption among the SMEs is not far to seek. The managed services model with its contract-guaranteed levels of performance has the potential of offering a much more permanent solution to the cost-sensitive SME market.

"In the recent times, we have seen greater adoption of managed services within the SMB segment in India. To maximize opportunities for themselves as well as to address unique needs of different SMBs cost-effectively, service providers are increasingly offering bundled managed services on an OPEX model," says Vikram Sharma.

"The model is also increasingly being looked at in the enterprise space as well. The core services for enterprises include hosted Unified Communications, managed TelePresence and managed MPLS. For SMBs, the potential lies in managed MPLS and connected branch 'SMB-in-a-Box'," says Vikram Sharma.

Verticals 

Almost all sectors have witnessed a growing demand for managed services. The key industry verticals that are adopting Managed Services include banking, insurance, pharmaceuticals, broadband, rentals, BPO,  education,  hospitality, manufacturing, logistics industries, etc.

"In India, we believe that healthcare and the financial sectors would remain as the main focus. However, we see the utility sector also scaling up," says Vishwanathan Shankar.

"Anybody and everybody who has an IT infrastructure (computers, servers, networking devices, etc.) including SOHO and home users, our solutions and services cater to a wide cross-section of verticals. We have developed specific solutions for the banking, insurance, pharmaceuticals, broadband, rentals, BPO, education, hospitality, manufacturing and logistics industries, etc.," says Girish Krishnamurthy. 

"Even though the managed services model is suited for most SMBs and enterprises, those in the IT and telecom sectors have been the early adopters," says Vikram Sharma.

According to Anshul Gupta, telecom has become economy mover in the country. Hence, it becomes important that services are efficiently and cost-effectively managed. He says, "RailTel is also, thus, seriously looking at MSP to provide efficient services, as the business sphere grows."

Opportunities for Channel Partners

Today, time is ripe for channel partners who are willing to become managed services providers. In the past, they had to make significant investments in software, hardware, training and personnel to become MSPs. However, with the emergence of third-party vendors who are responsible for the delivery of helpdesk and management/monitoring services, it has become somewhat easy for the channel partners to scale up their businesses without increasing their investment. 

Though offering managed services may be easy today, channel partners need to ensure that they are providing the right managed services. 

Finally ....

Managed services are increasingly becoming a strategic option for enterprises in India. The MPS market has evolved over the years, and today it has become a core business process in every enterprise. Enterprises, which have not yet leveraged MPS, are looking at it as a potential business enabler. 

Managed services are here to stay. The question that is pertinent: Are You Ready for Managed Services?

to be contd..... in August Issue

For more contact :
Deepak Singh
edit@varindia.com