As networks became more and more complex with numerous applications and services running on them, Indian businesses
were actively outsourcing their network management needs to network management service (NMS) providers in the last fiscal. Apart from cost savings, a growing number of organizations realized the need for a set of service providers to professionally manage these services. It was realized long back that outsourcing provides a significant competitive advantage companies seeking to rapidly expand networks across the country. Such organizations usually would not have the time or the competence to manage the networks, and their business would be better served by focusing on their core competencies. This realization resulted in an exponential demand for managing enterprise network services such as those for LANs, WANs, VPNs, VoIP, intranets, and extranets.

The managed services industry moved a step beyond the hardware and infrastructure management, to the services attached to the hardware. Enterprises have now started looking at end-to-end service, which would provide all the pieces under a unified SLA.

The industry moved from pure uptime SLAs to SLAs that managed professional and training services from the service provider. A lot of this sift was attributed in part to the emerging competitive necessities. In the case of large networking orders, clients demanded a partner who could offer end-to-end services (from consulting to project management, and integration to network management).

As the market began to mature, service providers added services like disaster management and bandwidth management to their portfolio. The overall NMS market registered a 33 percent growth to reach Rs 311 crore in FY 2004–05.

Trends
In the last 12 months, Indian enterprises have undergone a change in focus wherein they are looking at different models of outsourcing for different levels of IT-related activities.

Bandwidth management, application response time management, network management services with guaranteed bandwidth savings were the flavor last year and still continue to be. PSUs, private sector, banks, and retail had significant traction.

Retail automation-both forward and backward integration-saw an increase in the need for NMS a result of consumer boom in the retail segment.

Services like facility management; providing resident engineers, network management tools, and remote management tools were some of the more popular services. End to end network management, integration with vendors, and co-ordination with telcos for availability of lines was also a part of the portfolio. SLAs were expected to cover the complete gamut and the SP became a single point of accountability. 

Facilities management became commoditized and margins were, therefore, extremely squeezed. A more comprehensive model emerged, with consolidation of different activities like data center management, access control management, and database management besides the traditional personnel acquisitions for managed services.

A shift in the nature of outsourcing contracts also led to a change in the nature of SLAs.

These not only became more stringent, but there was also a new level of awareness from both the clients and the SPs. More than delivery of uptime in the SLAs, it was management of these SLAs that was the differentiator.

With integration of various IT elements, unified SLAs became the rage in NMS.

The three key elements that go into NMS are: tools, people, and processes. The right set of tools, integrated with the task mangers, managed by the right set of people, and operated through the right processes became the way of offering unified NMS.

The market is measured on two factors-solutions on the hardware and services attached to the hardware. Services attached to the hardware gained importance and that significantly increased dependence on SPs. The user industry moved to a one-window interface scenario and looked at more traction per solution.

Security was another area that found importance. There was significant development in the area of security in solutions space. And now it is an expected integrated service of service offerings from SPs. SMB market was the unexpected contributor.

B-level cities like Pune, Hyderabad, and Chandigarh witnessed large number of projects for NMS primarily due to the presence of call centers and the BPO industry there.

What's Driving the Market?
Huge buying from industry verticals like telecom, BPO, and BFSI providing silage for growth. Aggressive expansion plans in broadband by telecom companies toog demand to unexpected levels. The continuing growth in BPO also kept the momentum up, while the immense potential of wiring so many of the remaining branches of nationalized banks, coupled with rapid expansions by private and foreign banks led the networking industry on to new levels of growth.

BFSIs opened up to remote management with more awareness on security from the SPs. Though it was more of on-site, the remote management trend caught on. With the security challenges being addressed and customer confidence won, there was more remote management for wide area networks. Not only did the industry grow in terms of numbers but also in terms of the size of the business deals, which increased and ran into millions. Apart from the hardware maintenance it was the services attached to it that escalated the revenue.

 SPs in India received large deals from clients in countries like Sri Lanka, Bangladesh, and Maldives.

Market Players
Many system integrators like Datacraft, GTL, Sify, and Network Solutions besides players like Wipro Infotech and HCL Comnet established network managed services (NMS) and security services as viable revenue streams.

Faced with a buoyant market, NMS providers like HCL Comnet and Datacraft also began investing heavily in new technologies and products for their infrastructure.

For HCL Comnet the focus shifted from delivering plain uptime SLAs to efficient management of the SLAs. They offered the higher-level services of network management such as bandwidth management in the form of bandwidth utilization and management and right sizing of the bandwidth as a value add to the customers. For the company, after SLA management it was bandwidth management that was next in the value chain. As more and more businesses moved towards centralized applications management-application response time management and monitoring services-end user experience management became the key differentiator in the service offerings from an SP. The key clients for HCL Comnet were ITC (linked for the e-choupal project). The company also handled Mahindra Finances' retail remote management. HCL grew from Rs 80 crore to Rs 112 crore in FY 2004–05, registering a 38 percent growth. Its other client included HLL, Indian Bank (for 800 locations), Dena Bank (30 plus locations), and IFFCO. And British Oxygen, Deutsche, Nike were amongst the international deals. For SEBI it provided market surveillance and infrastructure management under a unified SLA for both hardware and software services.

HCL made two new investments-satellite communication (i.e., broadband satellite for retail) and high availability VSATs for the financial markets. The company was in the process of investing in a new facility at Noida for remote management to house captive center units.

HCL made a dedicated move to the mid-size market with a dedicated team to offer integrated services. The industry expects a 60–70 percent growth from the SMB market.

Datacraft was selected by Jabil Circuit to provide the entire network infrastructure for its new manufacturing facility located at Ranjangaon near Pune, in the state of Maharashtra.

It was also selected to design and deploy an enterprise wide area network (WAN) that will connect 44 branch offices of one of India's largest private insurance companies to its Bangalore headquarters.

Wipro Infotech worked with VST Industries, Colgate Palmolive, HDFC Bank, and the Indian School of Business, Hyderabad in the area of complete IT outsourcing.

Emerging Partakers
Vendors like IBM, HP, and NCR; and telcos like Reliance, Bharti (with IBM), and VSNL; besides Wipro Infotech, Infosys, HCLT, and HCL Comnet all joined the race to garner a share of the business pie. From providing desktop and network support to hosting the physical infrastructure in their own premises and providing online connectivity to their clients and specializing in niche application services, were all on offer. The portfolio of services also included disaster management and diagnostic systems, which focused on predicting failures based on which corrective action could be taken.

Large companies such as ITC and Tata Steel had already outsourced most of their non-critical information systems and network management needs.

The reason why vendors were able to get their case right was the continuous change in hardware systems. It is not very easy for companies to keep up with rapid changes on the hardware and software front. Thus, vendors also got into the managed services to move in tandem with changes in hardware or software technologies without wasting clients' time to train and manage the new services.

Manufacturing, BFSI and telecom were in the forefront with the potential to spend anything between Rs 4,000 crore to Rs 5,000 crore over the next four to five years. However, the Indian players were in the danger of relinquishing to the global MNCs when it came to the large-sized deals.

Indian corporates associated with MNCs like HP and IBM mainly because they were a one-stop shop and were equipped in terms of capabilities, methodologies, tools and process, transition management, and in implementing the SLAs in catering to the requirements.

But this did not imply that the Indian counterparts were not getting their act right. They all moved from being infrastructure-centric to becoming service-centric organizations.

Minu Sirsalewale