Shining armour amidst the recession : Remote Infrastructure Managed Services

On September 15,2008 Lehman brothers filed for chapter 11 Bankruptcy and soon many
others followed with Bank of America taking over Meryll Lynch .Freddie Mac & Fannie Maie
were bailed out by the US Government. The US economy had plummeted and was now in deep
recession after a prolonged slowdown. The rupee had appreciated to the Rs 40 mark and this
had already hurt the margins of the Indian IT vendors since the past two years.

But today with the Dollar hovering around the 50 Rs mark most of them should have been the happier of the lot.But they still wear a gloomy mask thanks to the forex losses on account of some hedging practices for which no one can blame them.Another reason of worry would be the tax benefits that are available to the IT industry only till March 2010 after an extension already.

The slowdown if anything has had the most severe impact on the Indian IT Sector compared to any other Indian sector.With the impacts of recession looming ever so largely, slowly but surely companies have began looking at ways to reduce costs, shore up liquidity to account for unforeseen expenses & to increase operational efficiency. Many a CIO’s were now concerned about their IT Investments.

Most of the fortune 500 companies outsource their annual software development and
maintenance projects to Indian Software vendors led by TCS,Infosys,Wipro,Satyam and HCL
Technologies. However with the effects of recession more and more of these fortune 500 companies looking at reducing their IT Spends and also looking at re-negotiating their existing contracts.

With this macro-economic development that is having a significant impact on the Indian IT
Industry I strongly see the IT Spends being divided into two the non-discretionary and the that discretory spends,the latter being something that cannot be curbed or put for later by these companies .That is where the concept of outsourcing your discretionary spends to Indian vendors takes birth.i.e A company can do without a SAP Upgrade till next year but has to make sure the lights of the server that runs the application are on and also try to minimize the spends further.

When you talk about keeping the lights on let me start by going backward.In todays times a company may not be able to afford to pay for their application development projects.As Nortel Networks and now General Motors have filed for chapter 11 bankruptcy there is an immediate liquidity crunch and TCS for whom both were sizeable customers will feel the impact of existing sales receivables being delayed and new projects being pushed back.More than anything the uncertainty over their existing contracts would be a cause of worry.

But within all this there is a huge opportunity for Infrastructure outsourcing.Imagine your Laptops ,desktops and servers being managed by your internal team and it costs about xx dollars.But what if you want to save costs further then you have the option of outsourcing that to a team that sits in India.Isnt that a logical option that you would take if you were a CIO.Thats what defines the crux of Infrastructure Managed Services.

Infact Infrastructure Managed Services and Remote Infrastructure Management (RIM) is now being touted as the third mode of delivery of IT services after the ADM, from across the world which would reduce costs by smart IT Investments and offshoring IT functionalities.HCL Technologies,Wipro are some of the Indian vendors who are doing well in this industry.

Through this blog I will highlight the opportunities and strategies taken by companies and what lies in store ahead.With the little knowledge I have I hope I can share with you what I feel about this industry which I am a part of love and indebted too.