Indian IT Scenario: Whats in it for Service Providers

Indian IT Market is both perplexing & exciting, reason, its evolution is logarithmic and not exponential. While the top Indian IT conglomerates were busy automating, hospitals across the world, setting ticket management systems from Railway Houses to State Transport corporations, using RFID to track, Indian corporates was in a deep slumber. e-Governance was seen as a deterrant to "Under The Table Revenue" and that which create "Transperancy & Accountability". Barring a few corporates which invested in IT, most usually the Indian Corporate Houses never really took greater interest in IT investments as much as they did for their own business divisions. The age old central EDP room was a stigma and a "Cost Center" and the EDP manager of 80s did everything from Electrical Cabling to Telephone Maintenance in addition to his core activities(which often took a beack seat!).

The evolution if anything to go by is purely extraordinary. From buying Hardware in 80s to buying ERP softwares in 90s to automate the Production Planning & Purchase Divisions, today's corporates talk about IT-Business Alignment in India. The impetus has certainly been there to make IT pay for the efficient business functioning, one to improve productivity. With the advent of Internet in 90s, the corporates felt the need to use the power of internet to create a distinct marketing strategy to sustain a continued Comptetitve edge and so the use of Websites & e-mails increased their internal IT complexities.
The companies now talk of "IT Stragey" formulation much similar to "Business Strategy" and "Finance Strategy". CIOs have become more aware to align IT Strategy to Business Strategy and are also looking constantly at ways to achieve this. Words like Selective Outsoucring, Co-Sourcing & Smart Sourcing are going a buzz and Outsourcing Daily Operations of Data Center & Applications to WAN is a common Sight in today's context.

From a Service Provider Perspective, this is a monumental phase as it has seen turnaround from a Central EDP room operation to Distributed Computing and Wireless access. The same service providers or the system integrators started off by selling IT Hardware to ERP Packages are now part of any corporate's core "Outsourcing" strategy managing the Systems Integration as well as Annual Maintenance of the IT Systems. This created an operational revenue stream for Servoce Providers and breather to plan & innovate their business model better. But, looking at massive economic growth, the corporates whether financial Power Houses, Manufacturing or Banks are expanding at exponential rate and also reaching out to far remote corners of the country and would therefore seek a seamless integration of IT Services provisioned at the same pace and rate at which a head quarters is provisioned. Obviously this looks to be a huge business opportunity for any IT Service Provider and would look to build large teams of professionals to manage such massive expansion plans of their clients. But this comes with potential risks such as:

1. Manpower Inflation in India
2. Knowledge Retention
3. Customer's de-risking strategy of chosing multiple vendors and thereby each vendor getting a smaller pie of the business
4. Cost of Recruitment, Training and Overheads

The Service Providers need to carefully analyze the pros & cons of a pure SI/ Manpower based model to help support their customer's expansion. Its nimble footed and on a weak wicket and the model might crumble under its own weight of deployed manpower. Service Providers must look to innovate the business model and instead of deploying large amounts of Onsite Manpower, must look to ration out a model of Onsite - Remote Support Combinational model. Remote Model not only reduces large manpower dependance, it also creates specific business advantage such as:

1. Centralized Project Management
2. Knowledge Base & retention
3. Provisioning Uniformly and periodically
4. Managing Scheduled Change Management Strategies
5. Asset Management
6. Superior Client Reporting & Acountablity

The adoption of Remote Model of Support and other techniques such as S-a-a-S actualy helps bring down customer's TCO down substantially and also at the same time helps the Service provider to invest in innovation at the back end and bring further cost benefits and transfer it back to customers. Service Providers can also look to adopt stratgies such as ITIL to drive their Remote Team to efficiently manage end Customer Delivery.

The Future:

Once the operation management dust settles in Indian corporates the next phase would be to look into aligning IT with Business using various methodolgies such as COBIT/ITIL and other ITSM strategies. Service Providers, while they are currently addressing the present SI/AMC market must have an eye for the future and start a core small team within to invest in the newer emerging areas so that they can have an early mover advantage in the future market.

The IT Services Market is directed as below:

Hardware->Software(MRPs)->Systems Integration(AMC)->Remote Support(S-a-a-S)->Consulting(COBIT,ITIL) ->Compliance(SOX, BASEL,GLBA)-> Enterprise Risk Management

Certainly the Service Providers who have seen this trend are the ones emerging victorious in the market space.