Prospects Galore

The network management system has been actively outsourced in India since
network complexity is becoming a growing problem, along with the shortage of
skilled IT staff. The demand for network management services has provided the
much-needed market opportunity for Indian corporates. System integrators and
hosting service providers are all getting into the act and jumping on to the
bandwagon.

The network management service (NMS) provides a secure architecture for
upbeat remote network monitoring and management of storage networks round the
clock. It helps maximize network availability, decrease the likelihood of
serious outages, and provide information to help optimize network performance.

Network management covers an extensive area-security, ensuring that the
network is protected from illicit users; performance, eliminating bottlenecks in
the network; and reliability, making sure the network is available to users and
responding to hardware and software malfunctions.

According to VOICE&DATA estimates, network management services grew from Rs
709 crore in FY 2006-07 to Rs 886.3 crore in 2007-08, a 20-25% jump, which is
quite healthy. HCL Comnet topped this segment registering revenues of Rs 275
crore in FY 2007-08 as compared to Rs 220 crore during the previous fiscal.
Wipro Infotech registered revenues of Rs 261.2 crore and registered a 39.9%
growth as compared to Rs 186.6 crore during the previous fiscal. Datacraft
follows Wipro Infotech with revenues of Rs 159 crore and a 33% growth.

Major Deals

Wipro Infotech, one of the leading players in network management services,
bagged three major deals. A major contract is from Pantaloon Retail, which has
ambitious growth plans to enhance its geographic footprint, and will increase
the number of its outlets to over 2,500 in the next five years. To support these
strategic initiatives, Pantaloon has selected Wipro for delivering streamlined
IT operations and comprehensive infrastructure management.

Wipro Infotech's other contract was with FamilyCredit, the consumer finance
organization of Societe General Consumer Finance in India, for managing its IT
infrastructure and applications management. The company's third major deal was
with Saudi Arabian Airlines to deliver next-generation IT infrastructure.

On the other hand, DataCraft bagged its largest deals in BFSI verticals with
companies like SBI, HSBC, and CitiBank. Other major contracts include the ones
with Genpact, and VSNL.

Growth Drivers

The Indian market currently shows a very strong trend toward outsourcing,
and it appears that the market will accelerate in the coming days and months.
Increase in centralized applications, quality of last mile connectivity, and
boom in infrastructure investment are major growth drivers of the network
management services this fiscal.

Adoption of core banking solutions, even by smaller cooperative banks, is
accelerating the requirement for network and, therefore, for network management
solutions. Besides, managing complexities of large organizations with huge and
widespread networks as well as managing users' requirements is fueling the
growth of network management services.

Due to e-enabling taking place across all industries to connect to the end
user, there is a considerable increase in the demand for additional bandwidth.
On the other hand, bandwidth cost has come down drastically, thus resulting in
the rapid growth of the network management system.

Wireless communication is also driving the growth of network management
services significantly. Today, most organizations are moving from fixed to
IP-based telephony. Therefore, there is a requirement for the use of network
management solutions to establish voice quality. All these developments have
acted as growth drivers for the network management market.

The biggest contributor to the NMS segment was BFSI including banking,
finance, securities, investment, and insurance. The other verticals that
contributed heavily to this segment were IT/ITes, FMCG, and telecom service
providers.

Roadblocks

Despite the huge growth potential, the network management services market
faced a number of challenges. Firstly, the ever-increasing complexity of
networks was a major concern because this makes monitoring network performance
and quality of service a challenge.

Secondly, security of data is becoming a crucial issue. As networks become
complex and a large number of devices get added to the network, the biggest
threat to the network is security, or the lack of it. IT managers are also
becoming security conscious and have begun demanding newer and better firewalls
and intrusion-detection systems.

In converged networks, the demand for network management is higher due to the
need to manage real-time traffic. Moreover, there are SLAs that are in milli-seconds,
and today's tools based on MIB polling with 5-minute intervals are too slow to
manage these types of application traffic.

Another major concern is the attitude of enterprises that are not open to
spending on network management services.

Though the network is a vital component of business and without it business
operations are susceptible, the cost of network management is higher than what
organizations would want it to be.

The Road Ahead

The future of the network management industry looks quite bright. There will
be a definite shift toward a multi-sourcing model for management of services.
Some core processes will still be retained through their internal teams, but
with pressure from business users demanding 100% availability, the outsourcing
boom will takeoff.

The network management services segment will see system integrators aligning
with service providers to manage networks of enterprise customers. With
globalization, as well as companies' focus on global standards, the network
management services market is bound to grow and the potential is huge and
bullish.

Arpita Prem

arpitap@cybermedia.co.in