Project Report
TOPIC:

“REMOTE IT Infrastructure Management ”

1. Abstract
The recently launched NASSCOM-McKinsey Report 2006 yet again reaffirmed views of the global gurus that Remote Infrastructure Management (RIM) Services are all set to become the next star of the Indian IT Industry. It clearly states that “going forward, the more traditional IT outsourcing service lines such as hardware and software maintenance, network administration and help desk services will account for 45 per cent of the total addressable market for offshoring and are likely to drive the next wave of growth. . Service lines that have driven recent growth, i.e., application development and maintenance (ADM) and R&D services are already 30-35 % penetrated and are not as likely to grow dramatically”. The Remote/offshore part was easy with BPO having already paved the way for proving service delivery effectiveness from an offshore location and with the advent of sophisticated tools and technologies that enabled remote IT management the proposition was further solidified. International research firm IDC also declared that “more than 85% of infrastructure components can be managed from a central remote location. These components encompass servers/systems, databases, networks, storage, security, applications and e-business infrastructure. Through managing these components from a remote location, companies can cut down their cost of infrastructure operations and management by 40-60 %, also gaining access to expert ‘skill-on-tap’ on a 24x7 basis” For decades the global giants who had been ruling the Infrastructure Management Services (IMS) market boasted of a very rigid model of service delivery to companies; which is often termed as the ‘Traditional IT Outsourcing Model’. In the traditional outsourcing model, a third party service provider would take over the entire IT assets of an organization and run it with a combination of on-site and near-shore services. This approach came with a ‘lock-stock-and barrel’ proposition, wherein the entire IT operation was handed to an outside provider with complete loss of control and flexibility on the part of the CIO. Remote Infrastructure Management Services ensure that enterprises enjoy an effective, efficient and productive IT infrastructure operation, while optimizing its investments in technology,

people and processes and guaranteeing greater quality and increased end user delight.

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2. Declaration
This Project Report is submitted in total fulfillment of the requirements for PGDBM (P/T) at IMT, Ghaziabad. I declare that this Project Report is my own work and that it does not contravene any academic offence as specified in the University's regulations. No portion of the work presented in this report has been submitted in support of another award or qualification at either of the partner institutions or elsewhere. I confirm that all this work is my own except where indicated, and that I have: Clearly referenced/ listed all sources, as appropriate Referenced and put in inverted commas all quoted text (from books, web, etc) Given the sources of all pictures, data etc. that are not my own Not made any use of the report(s) or essay(s) of any other student(s) either past or present Not sought or used the help of any external professional agencies for the work Acknowledged in appropriate places any help that I have received from others (e.g. fellow students, technicians, statisticians, external sources) I understand that any false claim for this work will be penalized in accordance with the University regulations.

Confidentiality I confirm that this Project Report does not contain information of a commercial or confidential nature or include personal information other than that which would normally be in the public domain unless the relevant permissions have been obtained.

Copyright The copyright for this Project Report remains with me.

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3. Acknowledgements

The inputs obtained from the consultations and researches were used as the basis for arriving at the recommendations on the road map for the proposed Remote IT Infrastructure Management – A revolutionary Mega trend in the field of IT Infrastructure Management: Research Project.

I wish to express our sincere gratitude and indebtedness to our course instructor Prof. D.P. Goyal for his invaluable guidance and support throughout the course of this project. His able mentorship was instrumental in the successful completion of the project.

I would also like to thank all my friends and classmates and colleagues who helped me whenever I needed them and enriched my work with their invaluable suggestions.

I also wish to express my gratitude to my colleague Mr Atul Kumbhkarni for his valuable suggestions which helped in enriching this Research Project.

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4. Contents
1. Abstract ........................................................................................................................... 2 2. Declaration...................................................................................................................... 3 3. Acknowledgements......................................................................................................... 4 4. Contents .......................................................................................................................... 5 5. Introduction..................................................................................................................... 6 Outsourcing to India can be categorized in the following manner: ................................ 6 Infrastructure outsourcing representing almost 1/3rd of the total outsourcing market... 6 5.1: Approach to Assignment: ........................................................................................ 7 6. REMOTE INFRASTRUCTURE MANAGEMENT...................................................... 8 6.1: Evolution of RIM..................................................................................................... 8 6.1.1: Maturity of the offshoring (Global Delivery) model:....................................... 8 6.1.2: Technical feasibility:......................................................................................... 9 6.2: The Existing Scenario.............................................................................................. 9 6.2.1: Remote Infrastructure Management Services................................................. 10 6.3 Why Remote Infrastructure Management:.............................................................. 12 6.4 Growth Aspects:.................................................................................................. 13 7. Sourcing Models Prevalent ........................................................................................... 15 8. RIM – The India Advantage.......................................................................................... 18 Manpower: ................................................................................................................ 18 Location : .................................................................................................................. 18 Infrastructure:............................................................................................................ 18 8.1 RIM – Beyond a niche IT space: a great career opportunity .................................. 18 8.2 The Road Ahead ..................................................................................................... 21 RIM Adoption Scenarios: ............................................................................................. 21 9.Competitor Tracking...................................................................................................... 23 9.1 Global Delivery Infrastructure Management Evaluation........................................ 26 9.3 INDIAN VENDORS REPRESENT A VIABLE OPTION.................................... 27 VENDOR PROFILES .................................................................................................. 28 9.3.1 TCS. ................................................................................................................. 28 9.3.2 Wipro. .............................................................................................................. 33 9.3.3 Infosys Technologies ....................................................................................... 37 9.3.4 HCL Technologies. .......................................................................................... 41 9.4 Latest figures disclosed during Jan-Apr 2007 ........................................................ 43 10. Methodology ............................................................................................................... 44 11 References.................................................................................................................... 45

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5. Introduction
The scope of this project aims to understand a new trend in the field of IT Infrastructure Management called Remote IT Infrastructure Management, which usually caters to the needs of large organisations having a Global Presence, by managing their IT Infrastructure remotely. Infrastructure Management Services encompasses a broad range of services. It refers to monitoring and management which includes maintenance, administration,

troubleshooting, and performance enhancement of the IT Infrastructure of any organization. It covers the entire spectrum of the IT Infrastructure including helpdesk, End User Desktops, sever and storage, databases, telecoms, Network, Security, Application Operations et al. Infrastructure Management Services is not a new phenomenon, for several years, companies have been working hard to reduce the cost of operating the IT Infrastructure – Datacenters, networks, databases, and business support software tools. The customers who were early adopters of IMS were driven by the need to focus on their core competencies and give away the non core functions to service providers. This was the genesis of some early service providers like EDS, IBM etc. Outsourcing to India can be categorized in the following manner:
Infrastructure outsourcing representing almost 1/3rd of the total outsourcing market.
Estimated worldwide outsourcing market size 2005; Percentage 100% = ~US$328 billion Application Development and Maintenance1 Business Process Outsourcing

0.5 0.4 0.3 0.2 0.1 0

43%

Infrastructure Outsourcing

33% 24%

IT Infrastructure

IT ADM

G&A outsourcing

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5.1: Approach to Assignment:
The first stage of the assignment, involving the design of a road map for the planned research project was executed primarily through interactions with key people at HCL Technologies, one of India’s Premier IT Services Provider. • • • Identify the key objectives of their Infrastructure Services Division. Determine the main functions, structure of the and its branches/ units. Assess the current state of ICT infrastructure services scenario in India.

Secondary research was conducted to identify the best practices used in a similar context elsewhere – domestic. HCL’s proprietary knowledge base and experience gained through many years of involvement in complex organisation wide operations effectiveness initiatives with various organisations across the globe were leveraged to identify the prevalent practices in similar organisations and in HCL itself. The inputs obtained from these consultations and researches were used as the basis for arriving at the recommendations on the road map for the proposed Research Project to be submitted in complete fulfillment of the requirements for PGDBM (P/T) at IMT, Ghaziabad .

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6. REMOTE INFRASTRUCTURE MANAGEMENT
Remote Infrastructure Management services consist of remote (outside the physical premises of a company’s facilities) monitoring and managing the infrastructure components and taking proactive steps and remedial actions across the IT landscape. The remote monitoring and management is undertaken through a combination of offshore/nearshore/global delivery center which is often termed as an Offshore Management Center (OMC), where skilled staff of a service provider monitor and manage the infrastructure, ensuring uptimes and availability. Some of Infrastructure management services that can be delivered remotely are Network Management Services, Datacenter Outsourcing, Helpdesk outsourcing, Desktop Outsourcing, Storage outsourcing, IT Security Outsourcing, LAN outsourcing, WAN outsourcing, Database and Application Monitoring & Management.

6.1: Evolution of RIM
Gartner Inc., a business intelligence firm, had indicated in its research that around 32% of a CIO’s IT budget was spent on internal resources to monitor and manage IT. This area, being a significant chunk, was also the area that required immediate decline. Once IMS outsourcing became a norm, RIM followed as a natural progression, offering an alternate model of delivery. Some of the key factors that have acted as a catalyst for the RIM being accepted worldwide are:

6.1.1: Maturity of the offshoring (Global Delivery) model:
As companies face continued pressure to cut costs, they have started including infrastructure-related opportunities in their offshoring requirements. This also allows the customer to gain from the scale of operation as is evident from the various multi service deals that have been won by India based Service Providers. ABN Amro deal with Wipro being the biggest.

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6.1.2: Technical feasibility:
The myth that a IMS outsourcing is associated and bundled with the physical assets of the IT department and the Datacenter and therefore precludes offshore delivery has been broken. It is estimated that between 60-70% of the IT services surrounding the datacenter, specifically the support functions of monitoring and management can be executed remotely due to the improvements in the remote-monitoring and diagnostic capabilities of leading System and Network management tools. Reasons like emergence of Business Continuity Services, globalization, increased awareness of RIM market and availability of low cost countries is forcing buyers to think of new ways to service users 24x7 across the globe while increasing efficiency and effectiveness. Moreover organisations are opting for RIM due to advanced security technologies to mitigate risk due to offshoring. But foremost, Indian companies striving to move beyond application services and repeat their success in new

opportunities/markets like RIM.

6.2: The Existing Scenario
With the advancement in processes and tools and the proven maturity of Global Delivery for IT Infrastructure Services, today RIM is becoming a strategy of choice for CIOs across the globe who are keen to take advantage of the labor arbitrage without compromising on quality and responsiveness of services. Today, Offshore vendors have started to invest aggressively both in infrastructure talent and highly available network connectivity globally. At the same time, automation tools, more effective processes, and onshore consolidation efforts have made corporate IT departments increasingly comfortable with locating more of their infrastructure support personnel remotely from assets and users.

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Infrastructure Outsourcing market: Representing All Players 2005; Percentage
100% = US$109 billion RIMO 1% IMS

24%

75%
Traditional IO

6.2.1: Remote Infrastructure Management Services
Desk Management Call Management Escalation Management Change Management Email And Tele Support Hardware/System Maintenance Troubleshooting Health Checks Performance Fine Tuning

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Other Features That Are A Part Of RIM Are System Administration Software Installation Configuration And Maintenance Security remediation Backups/Restores Network Monitoring And Management Basic Reporting Advanced Services And Intrusion Detection Services Database Management Performance Analysis Bench Marking And Testing Data Back-up Management Managed Information Security Services Policy Management Asset Management Capacity Planning Vendor Management Services

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6.3 Why Remote Infrastructure Management:
• Remote Infrastructure Management Services (RIM) is evolving at quick pace. According to IDC, in a study, estimated that more than 85% of infrastructure components can be managed from remote locations. • Service providers are doing big ticket investments to develop their delivery capabilities. • In next 2-3 years large clients will be expected to deliver remote infrastructure delivery service as a requirement in the majority of new outsourcing deals • Infrastructure services delivered in a global delivery model from India to US companies will surpass $1 billion. • RIM presently contains high risk for global delivery of services. But clients are relying on service providers to help manage and insulate them from risks. • High probability that in next 5 years 50% of the labor hours for global IT infrastructure service delivery will shift from on-site support to remote delivery. • • Increased globalization of organisation hence need for 24X 7 Services. Low cost geographies like Indian with robust Infrastructure and Human Capital capabilities. • • • • Advanced Security Technologies to mitigate risk due to offshoring. Pro-active management by means of enterprise management tools. Emergence of Business Continuity services. Need for repeatable, replicable service based on ITIL Model. (ITIL: IT Information Library)

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6.4 Growth Aspects:
IMO market shares3 Percentage 100% = Others
Microland Patni

US$460 M1
19% 2% 4% 11% 13%

US$720 M2
18% 3% 3% 6% 14%

100%=~US$26 billion

Infrastructure Management Outsourcing market 2005; Percentage

3%
Traditional suppliers (IMS model)

Satyam
Offshore suppliers (RIMO model1)

97%

Infosys HCL TCS

16% 14%

17%

19%

Wipro

20%

21%

Representing local (offshore) players.

FY 2004

FY 2005

Infrastructure Management Outsourcing market 2010; percentage
Traditional suppliers (IMS model) Offshore suppliers (RIMO model) 100% 80% 60% 40% 20% 0%
20% 80%

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Current annual Growth Rate comparing Total Outsourcing Suppliers and Remote Suppliers.

Traditional suppliers (IMS model) Offshore suppliers (RIM model)

46 10% CAGR 36 32 26 27 29 41

8.6 5.9

61%

3.7 2.3

0.5

0.8

1.4

25

26

28

30

32

35

37

7% CAGR

2004

2005

2006

2007

2008

2009

2010

RIMO market growth US$ billion

8.6

5.9
~60%

3.7 2.3 1.4 0.5 2004 0.8

2005

2006

2007

2008

2009

2010

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7. Sourcing Models Prevalent
Model 1: Global Outsourcing Under this broadest outsourcing model, client companies effectively hand off the entire IT department to the service provider. In this case, most firms retain only a reduced IT management organization. Nowadays, this approach has become increasingly uncommon. Some companies in the US and the UK, in particular, opt for this model, but their Continental European counterparts rarely go down this path. The approach only makes sense when the client company already has a global outsourcing strategy, not only for IT, but also for other activities. In some cases, the client company and the service provider create a joint venture that hosts the former IT department. The two most common brakes are depending on a single service provider and lack of experience or confidence in creating a joint venture. Global outsourcing should be aligned with the buyer company’s strategy: It makes sense when the enterprise — looking beyond just IT — massively outsources all noncore-business activities and very specialized processes. A proportion of such deals rely on the client and service provider forming a joint venture to ease asset and staff transfer and limit potential regulatory issues.

Model 2: Infrastructure Outsourcing Rather than opt for global outsourcing, many companies have found it easier to isolate and outsource only their IT infrastructure. Workplace management (desktop and laptop management) is usually subject to a separate contract, either with the same or with a different services firm. In the meantime, they retain their applications under in-house management. As for global outsourcing, this approach requires specific preparation for the staff transfer when the relationship first begins, and the joint venture approach crops up frequently to ease asset and staff transfer. Separating infrastructure and applications requires stable and well-defined processes supporting interfaces between infrastructure management and application management.

Model 3: Vertical Outsourcing This model involves outsourcing a vertical stack of technology elements devoted to a specific activity within the client company. Workplace management can be one of these vertical activities. When they separate systems in this way, companies can also consider

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outsourcing the associated business process — as in business process outsourcing (BPO). This is the business of specialists (payroll management, logistics, check processing, call/support centers, etc). The success of this model is related to BPO growth — which differs dramatically between the US/UK and Continental Europe. relationship involves significant staff transfer to the service provider. The typical

Model 4: Best-Of-Breed Selective Outsourcing Selective outsourcing currently dominates the market. Many companies expect better results when they select the best service partner within each specific service category. These companies customarily separate: hardware and operating systems (mainframes, servers and Unix, servers and Windows); the main middleware categories (like security management, storage management, collaborative tools and messaging, and integration tools); and application categories (generally vertically). Some companies fragment even further: They establish a separate outsourcing relationship for each of the following domains according to the expertise of the provider: system management (hardware and operating system) and hardware maintenance; application testing, maintenance, and operations; and middleware customization, management, and operations. Integrating services in this case requires a solid management effort, with a significant internal team. A few companies outsource this service integration task to one of the outsourcing providers or an external consulting firm. Eg, ING has retained Accenture to lead several other service providers in a workplace services environment. Companies that opt for the selective sourcing approach must have the right evaluation criteria to effectively select best-of-breed vendors, domain by domain.

Model 5: Combined Infrastructure And Vertical Applications In this model, companies select a single service provider for infrastructure management — or two when workplace management is separated — and several specialists for application management, while retaining some applications under in-house management. Without suffering the complexities of the best-of-breed approach, companies can select key partners for vertical domains. Also, many companies that opt for this model keep some strategic applications internal, for example R&D and CAD/CAM software in the aerospace and automotive industry, or financial asset management in the banking

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industry. In this model, the ability of service providers to work together, and the ability of the client to control them, remains a challenge

Model 6: Horizontal Outsourcing In this model, companies select a single service provider for application management (developing, maintaining, and running applications) and another one for infrastructure management — two if the workplace management is separated. This situation is often a second phase after infrastructure outsourcing (Model 2). Some people consider this model a variant of Model 5, pushed to the extreme. This strategy requires selecting the rare services firm that is able to cover all the vertical specificities of the client. However, some service providers have built application centers able to deliver all the applications services, backed up by expertise centers.6 The main challenge of this model is the ability of the two service providers (handling infrastructure and apps, respectively) to work together, with limited client arbitrage. Few outsourcing clients currently pursue this approach.

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8. RIM – The India Advantage
Manpower: India has highly skilled labour pool which has ability to cater to global clientele. India has witnessed a healthy growth in the number of its IT professionals. From a base of 6,800 knowledge workers in 1985-86, the number is projected to increase to 650,000 IT software and services professionals by March 2003. It is estimated that out of the 650,000 knowledge workers, almost 205,000 are working in the IT software and services export industry; nearly 160,000 are working in IT enabled services 25,000 in the domestic software market and over 260,000 in user organizations. Location : Low cost, easy accessibility of India as a location and emerging centers of excellence with multiple cosmopolitan cities is another very significant pull factor for India as a destination of choice. Infrastructure: The Indian telecom industry is one of the fastest growing industries. With the entry of global players there has been tremendous infusion of capital and creation of best of breed infrastructure. India’s capability, experience and depth in this space has challenged the traditional IT service providers across and range of services.

8.1 RIM – Beyond a niche IT space: a great career opportunity
One of the important drivers that make RIM an attractive career is the exciting and challenging environment it offers to professionals. A career in the Remote Infrastructure Industry also offers a continuous learning curve to its practitioners. Being responsible for 24X7X365 monitoring and management of IT Infrastructures of global enterprises RIM experts have to consistently upgrade their knowledge and grasp of new technologies entering the IT Infra space. Our employees have to keep themselves abreast of the new as well as legacy technologies, thus ensuring a continuous process of learning and growth inside the system.

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Further, it gives a graduate engineer an opportunity to earn anywhere between 5-7 lakhs after a reasonable level of experience and grow to the level of a Manager or Consultant in a very short span of 5 years through focused growth programs. For experienced professionals, the compensation is even more attractive and the growth opportunities include leading worldwide Projects and Technology practices. There are many such unique aspects of this Industry which translates into a ‘hot’ career aspect for IT professionals. Benefits Cost reduction has been a driver for decades in the IT infrastructure space as CIOs around the world continue to face increasing user demands and shrinking budgets. The challenge is to evolve an IT infrastructure management strategy that leverages existing investments, with increased service levels for end-users, improved end-user response time through proactive management, and increased flexibility at reduced costs. But there are benefits beyond costs that RIM brings. Increased customer satisfaction: • Shift from reactive to proactive management through increased automation and reduced human intervention. • • Measurable metrics to track service levels Real time control and visibility into the operations through reporting portals

Risk Mitigation: • • People independent operations Focus on creating DR Operation Centers and processes that ensure business continuity Increase coverage to 24x7: • Clients seek 24X7 Follow-The-Sun Model coverage and global footprint

Shift from Technology to Business Optimization • To support customers’ transformational objectives 19

Reduce IT budgets hence impacting the bottom-line • Concerns regarding enhancing service levels with no increase in IT Budgets

Flexibility • Through the Co-Sourcing model, enterprises have an option of outsourcing a specific function, several functions or entering the engagement in phases. This provides clients greater scalability and cost predictability making companies more agile. Quality and Process edge • Quality technology, people and processes defined by ITIL (IT Infrastructure Library), which ensures faster problem resolution. In addition to these standards, a known knowledge base of errors and standard operating processes provide continuous learning and ensure that the problems get the attention of the right expert, Domain expertise and dedicated skill-set • A good RIM service provider gives the customers access to experts on a 24X7 basis. Moreover, these specialists are constantly updated with the latest technology trends and the customer benefits from this “expertise on tap” Visibility and Control: • Through collaborative sourcing the customer retains control of its strategic components such as physical IT assets, technology refresh, policy and architecture which provides visibility into the availability, performance and utilization of each component. This visibility further enables them to take control of the situation, make informed decisions on future investments in IT, and improve current service levels. SLAs and Best Practices • RIM works under tough, black and white and precise service level agreements, with penalties on Non-Compliance and downtimes. These value propositions result to two distinct demands of customers: 1. Cost Reduction (30%-40% app) 2. Optimization that leads to transformation

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8.2 The Road Ahead
More and more global enterprises are seeking transformational benefits like those being provided by vendors like HCL from their existing outsourcing partners. Also, the sheer number of such offshoring deals will see a rise with a number of large engagements coming up for renewal in the next 2 years. RIM Adoption Scenarios: RIM market adoption can follow several scenarios, ranging from pure labor arbitrage to enabler of the enterprise IT transformation and provider of transparency into IT infrastructure. RIM can continue growing based purely on a labor-arbitrage business model similar to Application Development and Maintenance (ADM) Outsourcing. RIM can become an enabler of the enterprise IT transformation through IMO suppliers expanding their capabilities into the consulting part of the IT transformation business. Several factors are likely to attract buyers to consider RIM as an alternative to full-scale Infrastructure Outsourcing including lower degree of misalignment of supplier incentives around cost-cutting and asset- reductions, ability to retain IT assets still enjoying the advantage of productivity improvement and labor arbitrage, and better applicability of IMO model to support new and emerging technologies due to non-asset-oriented nature Both offshore and traditional suppliers realize the opportunity and actively invest in missing pieces of the puzzle by ramping up their efforts and capabilities

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IMO suppliers can leverage their knowledge of buyers’ operations and cross capabilities to offer business users additional value from transparency into IT infrastructure

Linkage of business and IT is complicated by the presence of two disconnects: disconnect between business process and supporting IT systems leading to unnecessary complexity in conducting business tasks disconnect between business and IT workloads leading to lack of understanding of IT efforts and costs by the business The technical solutions to these disconnects are emerging in the form of Service-Oriented Architecture (SOA) and multiple IT transparency frameworks (e.g., IT Service Catalog) By taking on monitoring and remote-management functions, IMO suppliers can learn a great deal about the buyer’s infrastructure and become well-positioned to tackle the business/IT transparency challenge

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9.Competitor Tracking
Indian Market Scenario Major players in the Indian Market targeting the top companies in EMEA, APAC, and the US are also the top players in IT in India. Infosys Wipro Technologies TCS HCL Technologies

These 4 players provide a range of offerings in IT Infrastructure Management and are categorized based on their service offerings in the Europe Market. While outsourcing across Europe has become an accepted approach for helping companies reduce their infrastructure management costs, European clients have begun, over the past 18 months, to warm to the idea of moving selected infrastructure management tasks to offshore or nearshore locations. The underlying aim is clear: By adding the offshore labor arbitrage to the equation, clients are hoping to reap further cost benefits from infrastructure outsourcing. During recent months, the two types of service providers — large, traditional on-site outsourcers and Indian offshore service providers — have been busy ramping up their remote infrastructure management resources and capabilities. Encouraged by the early successes of their remote infrastructure service offerings across North America, Indian vendors are now setting their sights on Europe. To achieve rapid growth in what still constitutes an emerging market, Indian service providers have made significant investments in the necessary resources and capabilities; this makes transitioning selected infrastructure management tasks to their control a sound and viable proposition.

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Physical infrastructure management resources have been established. Indian offshore providers have invested heavily in their data centers, network operation centers (NOCs), as well as training centers for infrastructure management staff. Most of the data centers and NOCs today use state-of-the art equipment and are linked to highly redundant and reliable telecommunication networks. Remote management capabilities have evolved. The great majority of the Indian vendors have established strong ties with the leading systems management tool vendors to leverage the latest versions of their remote management technologies. In addition, most Indian providers have invested in complementary reporting tools and dashboards to enhance the transparency of their service delivery. Infrastructure delivery expertise has matured. Most of the leading Indian vendors have become fairly proficient in infrastructure services delivery and are seeking ways to optimize operations in the same way that they optimize applications. To this end and to develop credibility and capability, they have made significant investments in resources and processes around the IT Infrastructure Library (ITIL) and the BS 15000 IT Service Management Standard. Furthermore, some companies are leveraging Six Sigma to drive continuous improvement of their end-to-end service delivery Local support and recovery functions are being set up. All of the Indian service providers today recognize the critical need to maintain a strong local delivery and customer management presence across Europe. Most companies, therefore, have invested in additional local language support and operation centers, mainly across Eastern Europe. In addition, most vendors will provide on-site support services through their own personnel or through dedicated local partners. European firms continue to grow their use of offshore outsourcing as an effective way to achieve cost savings and build successful IT operations. While application services like custom development and software maintenance are currently the main source of revenues for offshore providers today, European end users have started to show

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significant interest in remote infrastructure services over the past 18 months. Nevertheless, Forrester does not foresee European companies rushing into large offshore infrastructure engagements with Indian vendors, but expects them to apply a more cautious step-by-step approach. As a result, many European clients will be: Testing the water via on-site infrastructure consulting engagements. Many European companies will start using Indian vendors to help them with smaller consulting projects related to their existing infrastructure operations. These engagements will, for example, provide assessments of the client’s existing infrastructure management processes and contrast them with a best practices view based on the operational service management expertise that Indian vendors can provide. Initially outsourcing small selected remote management tasks. Clients will initially look to outsource confined monitoring and management tasks for desktops, servers, mainframes, and network components in limited numbers to Indian vendors. As part of their selective outsourcing strategies, most clients will thereby separate the remote management from the physical maintenance of the devices, which is likely to remain with local providers. Showing caution around outsourcing help desk operations. While theoretically well suited for offshore delivery, European clients will be extremely cautious about outsourcing help desk operations to Indian providers. Unless they can be convinced that the vendor in question offers very good local language skills to support their end users, most companies will want to avoid any potential cultural or language issues. Not transferring staff to Indian vendors. Although some Indian providers have successfully taken over limited numbers of staff from their European clients in the past, most companies will refrain from transferring employees to Indian vendors. The perceived cultural integration issues will present too much of an obstacle.

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9.1 Global Delivery Infrastructure Management Evaluation
OVERVIEW

To assess the state of the global delivery infrastructure management market for Europe and see how the Indian service providers stack up against each other, the strengths and weaknesses of top Indian vendors are evaluated. Current offering. As a framework for the evaluation we looked at various service elements — the underlying breadth of service offerings, security and disaster recovery capabilities, as well as offerings pertaining to consolidation, virtualization, and service management. Furthermore, we looked at delivery capabilities from both the operational and support perspective of the global delivery model, as well as network bandwidth and redundance. Finally, with regard to languages, on-site and nearshore support, as well as compliance with the European data protection directive are assessed. Strategy. Comparing the RIM service strategies of each company with a vision to assess how well each vendor is positioned for future success, a focus on the vendors’ underlying infrastructure vision and productivity investments, their commitment to adaptive sourcing and partnerships, as well as their asset and staff transfer strategies is done. Market presence. European remote infrastructure revenues and underlying revenue growth, the number and typical profile of accounts across Europe that use offshore or nearshore resources, and the number of desktops, servers, mainframes and network devices managed in Europe from an offshore or nearshore location are compared.

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9.3 INDIAN VENDORS REPRESENT A VIABLE OPTION

HCL, TCS, Wipro, and Infosys lead the pack.

HCL differentiates based on its deep infrastructure management expertise and innovative services strategy, while TCS maintains the broadest infrastructure management portfolio, with significant resources dedicated to Europe. Wipro has the strongest European market presence today and has already started to push beyond pure remote outsourcing. Meanwhile, Infosys is building up some strong growth momentum thanks to its sophisticated business-centric delivery approach.
Genpact, Satyam, and Patni offer competitive options.

Genpact is a strong performer with high-quality delivery processes and a sizable European presence. Satyam benefits from its holistic services approach across infrastructure, applications, and business processes, although the company still lacks a European presence. Finally, Patni positions itself for broader infrastructure and application deals, but needs to grow its European market footprint.

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VENDOR PROFILES Leaders
9.3.1 TCS.
TCS offers the broadest portfolio of infrastructure-related services across the planbuildrun value chain, with telecom infrastructure management tagged on as an added bonus. The company maintains strong technical domain knowledge and a good ability to support diverse technical domains. European clients will benefit from TCS’ strong local presence, with various nearshore and onsite support centers providing multilingual support as well as local disaster recovery.
About:

One of India's largest and most respected business conglomerates, Tata Consultancy Services in 2005-06 had groups revenues of $21.9 billion (Rs. 967,229 million), equivalent of about 2.8 per cent of the country's GDP, and a market capitalization of $51.3 billion. The Tatas together employ some 202,712 people. The Group's 28 publicly listed enterprises have a combined market capitalization that is the highest among Indian business houses in the private sector, and a shareholder base of over 2 million. The Tata Group has operations in more than 54 countries across six continents, and its companies export products and services to 120 nations. The Tata Group comprises 96 operating companies in seven business sectors Information systems & communications Engineering Materials Services Energy Chemicals Consumer Products

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Group financial performance and sector-wise operations
Services Material Engineering

20%

9%

4% 5% 7% 32%

23%

Energy Consumer Products Chemicals Communications & Information System

Tata Consultancy Services (TCS) is IT consulting, services and BPO organisation offering services to clients across 55 countries, with a vision is to be a Global top 10 IT services company by 2010. TCS has offices in 33 countries, over 35,000 consultants from 30 nationalities and more than 100,000 man years of experience, TCS offers a comprehensive range of IT services to clients in diverse industries, such as BFSI, manufacturing, telecommunications, retail, and transportation. Six of the top 10 corporations in the Fortune 500 list of the largest corporations in the United States are among TCS' clients. Service Offerings: IT services: TCS offers ADM services over the entire IT application lifecycle, including migration and reengineering, e-commerce and internet services, testing services, architecture and technology consulting, systems integration, as well as packaged software implementation across multiple industry and technology domains.

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IT infrastructure: The company offers services that include complete outsourcing of IT networks, consulting and integration, hardware support and installation, and infrastructure management.

Asset-based solutions: It utilizes its proprietary software assets to deliver solutions to clients in specific industries and has licensed several software intellectual property rights. It also develops and markets a variety of products across diverse industries. Engineering & Industrial services: TCS offers a range of engineering services, embedded software and R&D services to diverse clients, assisting in new product development and product lifecycle management through services Consulting: One of the first companies to set up an independent consulting division, TCS today includes consulting as an integrated part of any assignment to its customers in different industry segments. BPO: TCS offers a variety of transaction-based IT-enabled services. These include inbound call centers, back office support, engineering services and database services

Human Resource:
Employees
7000 70 60 50 40 30 20 10 0 1996 2006(3Q)

83500

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IT Infrastructure Services

TCS IT Infrastructure Services

Remedy Managed Services

Centers of Excellenc e

Infr astr uctu re Solu tion Cent ers Tools

SLA Base d Soluti on

Share d Servi ce Model

ITIL Framework

Six Sigma

Alliances

TMM

Infrastructure Offerings: Technical Help Desk Services Desktop Services Data Center Services Enterprise System Management (ESM) Network Management Services Managed Storage Services Database Services ITIL Process Consulting

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SWOT Analysis:
Strengths:

• •

TCS have strong mainframe capabilities TCS is capable in performing infrastructure management work that is commonly bundled with application management like production systems support, database management, and server monitoring.

•

TCS has six offshore infrastructure delivery centers located in Hyderabad, Chennai, Mumbai, Delhi, Calcutta, and Bangalore.

•

TCS has broad technical capabilities across AS 400, mainframe, Wintel, and Unix devices.

Weaknesses:

• • •

TCS has one ITIL certified staff TCS does not have any DRII- or BCI-certified consultants on staff. TCS has only one nearshore infrastructure delivery center located in Budapest, Hungary.

• • •

TCS has weak asset transfer strategy Weak presence in Global delivery management Weak help desk threatens to invite new clients

Opportunities:

•

Affiliation with the greater Tata Group also allows it to leverage existing European group resources to offer further depth and greater presence across Europe.

• •

On-demand service and subscription-based services. Local resource network ensures that European clients get the local flavor of services they might require.

•

Telecom infrastructure management.

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•

Mainframe management capabilities will give opportunity to TCS to go for large infrastructure deals and hosting biz

Threats: Paucity of certified staff to support the security and disaster recovery offerings

may become threat in long term for its expansion program in Europe to support missioncritical work.

9.3.2 Wipro.
Of all the Indian vendors, Wipro maintains the strongest European client base for offshore infrastructure services today. The company is actively pushing beyond pure remote infrastructure management and has recently begun to successfully compete head to head against traditional on-site outsourcers for larger end-to-end infrastructure outsourcing deals.
The company operates through five principal business segments.

• • • •
•

Global IT Services and Products Lighting and Health Science Consumer Care India and Asia-Pac IT Services and Products IT Enabled Services

Wipro Technologies is the global technology and consulting services division of Indian conglomerate Wipro Limited. It is leading provider of integrated business, process, and technology services. A leading global independent R&D services provider, the firm offers such services as application development, enterprise systems implementation, networking, systems integration, and technology consulting services. It also provides with offshore business process outsourcing (BPO) services. With operations in about 35 countries, Wipro Technologies has been growing rapidly due to number of companies, particularly in the US, looking to reduce costs through outsourcing various business functions. The global technology services division constitutes the majority of Wipro's business, accounting for about 75% of its revenue and almost 90% of its operating income.

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Service offerings:
Application Development & Maintenance Application Performance Management & Support B2E BPM Broadband BPO Business Intelligence Business Consulting CRM Data Warehousing e-Business Enterprise Application Services Enterprise Security e-procurement & B2B ERP Home Gateway IEEE 1394 Infrastructure Solutions Industrial Automation Learning Solutions Legacy Migration Multimedia Package Implementation PLM Product Support Process Consulting Space Communications SCM System Integration Technology Consulting Network Management Testing Services Optical Networks Quality Consulting System Design Voice Networks Web Services Wireless Networks Wireless LAN

Wipro’s Global IT Revenue pie

Custom App Dev & Maintenance, 23% R&D services, 37% Consulting , 1% Infrastructure Outsourcing, 9% ITES & BPO, 9% Package Implementation+Te sting + System Integration, 21%

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IT Infrastructure Services
Infrastructure Management Systems Integration

Data Centers

Netwo rks

Servers & Mainframe services

DBA Services

Telecom Network

Desktop Management

Security Services

Messaging services

Consulting SWOT Analysis Strengths

• • • • • • • • • •

A broad portfolio of infrastructure related offerings Strong European support functions Strong European client base for offshore infrastructure services. Strong Acquisition strategy Strong Delivery capabilities through its offshore centers in India and Europe. Strong R&D services and infrastructure management. Provides Multi lingual Support Wipro services can be unbundled or provided as point offerings Control over Attrition rate Competing with existing outsourcing competitors at the recompete stage of the deal. 35

Weaknesses

•

Wipro does not have any help desk agents located in nearshore geographies.Wide infrastructure offerings will negatively impact Wipro’s ability to differentiate in the long term.

•

It has to increasingly develop its nearshore centers, especially for help desk management in Europe.

•

Relentlessly focus on costs and process rather than value

Opportunities

•

Developing transition methodologies to ease this process from a customer perspective and is also exposing the cost savings associated with taking a high proportion of work to an offshore location.

• •

Looking at asset transfer in EU this will take Wipro into big league Needs to evaluate options for nonlinear growth, such as an IP-based solution framework.

• •

Hand held devices will be the key areas where Wipro will be foraying into Address SMB markets: Companies interested in adaptive provisioning and pricing models.

Threats

•

The company is in danger of spreading itself across too many different services domains simultaneously.

•

Wipro has to develop a strategy beyond labor arbitrage if it is to compete in the infrastructure market vis-a-vis the incumbent providers.

•

Wipro lacks the experience in taking over assets and needs to show savings from performing this work.

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9.3.3 Infosys Technologies
Although a late entrant into this market, Infosys is building up some strong momentum thanks to its use of innovative business service management methodologies coupled with modular, business-centric delivery processes. While faced with an initial struggle in finding the right skills locally for fast implementation, Infosys has since invested strategically in on-site and nearshore delivery options for Europe. Infosys Technologies Ltd. provides consulting and IT services to clients globally - as partners to conceptualize and realize technology driven business transformation initiatives. With over 69,000 employees worldwide, we use a low-risk Global Delivery Model (GDM) to accelerate schedules with a high degree of time and cost predictability. Its Vision and Mission is to "To be a globally respected corporation that provides best-ofbreed business solutions, leveraging technology, delivered by best-in-class people." & "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large."
Service Offerings: Application Development & Management:

Application Development, Application Maintenance, Application Re-engineering, Application Portfolio Management, Platform Services.
Corporate Performance & Management

Balanced Scorecard, Corporate Strategic Planning, CPM Technology Implementation, Data Architecture, Discovery and Solution Design, Integrated Management Processes and Methods, Strategy Execution Framework, Technology Architecture & Design.
Enterprise Quality Services

Defect Prevention, Metrics Based Performance Management, Performance Testing, Process Assessment, Process Training, QA Process Consultancy, Software Process Capability Improvement, Test Automation, Testing Center of Excellence.
Infrastructure Services

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Application Management, Datacenter Services, Desktop Services, Infrastructure & ITIL Consulting, Mainframe Operations, Network Services, Service Desk.

Packaged Application Services

CRM, Enterprise Application Integration (EAI), ERP, HCM, SCM.
Product Engineering Services

Additional Product Services, Offshore Product Development Center, Product Consulting and Professional Services, Product Design & Development, Product Lifecycle

Management, Product Sustenance, Testing & Automation, Systems Integration.
System Integration

Architecture Services, Business Intelligence and Data Warehousing, Enterprise Content Management, Enterprise Information Portal, Enterprise Mobility, Enterprise Security, Identity Management Enhancement (PE2). Migration and Re-hosting, Performance Engineering &

Revenue by Services
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
RePackage Consulti Develop Maintena engineer Impleme ng ment nce ing ntation 20.1% 21.4% 21.3% 20.1% 29.8% 29.2% 29.9% 30.8% 2.1% 2.3% 2.6% 4.3% 17.9% 17.0% 16.5% 17.1% 3.3% 3.6% 3.0% 3.2% Engineer Busines Other Products ing s Services Services Process 1.5% 1.6% 1.8% 1.9% 4.9% 4.5% 4.2% 4.0% 9.1% 9.9% 10.8% 9.8% 4.3% 3.7% 3.7% 3.2%

Testing 7.0% 6.8% 6.2% 5.6%

31-Dec-06 30-Sep-06 30-Jun-06 31-Mar-06

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Infrastructure Services:

SWOT Analysis Strengths • • Highly adaptable to clients demands by virtue of its size Its overall offshore infrastructure management capabilities stand out for their high process maturity • • • R&D is strong focus area. 82 invention disclosures and 20 patents applications in 2006. Strong strategies for investment Strong capabilities in Wintel, Unix, and network management and monitoring gives cost benefits.

39

Weaknesses

• •

Lacking focus to align ISM with core business lacks the nearshore capabilities to provide clients with multi-country infrastructure management support.

• • • •

Attrition rate, though low as per industry, but is going up Cannot get HR for infrastructure management High training cost Weak onsite support

Opportunities

• • • •

Vendors are eager to partner with Infosys. Will find opportunity in bundling application and infrastructure management Focusing on European market. Presence in World Economic Forum and the Bill Clinton Foundation work out as a opportunities to network with Fortune 500 business leaders.

•

Strategies like MD and Chairman on the boards of other companies helps Infosys to open doors at a senior level with both clients and prospects.

Threats

•

Weak security and disaster recovery capabilities and no certification will raise issue in European countries

• •

No major experience in staff transfers Weak market presence

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9.3.4 HCL Technologies.
HCL has strong infrastructure management background and innovative services strategy. The company has grown from being a pure-play IT operations supplier to an end-to-end service provider capable of initiating and managing infrastructure transformation to help clients better align with their business needs. HCL is one of the leading global Technology and IT enterprises with annual revenues of US$ 3.90 billion. The HCL Enterprise comprises two companies, HCL Technologies and HCL Infosystems. The 30 year old enterprise, founded in 1976, is one of India's original IT garage start ups. Its range of offerings span R&D and Technology Services, Enterprise and Applications Consulting, Remote Infrastructure Management, BPO services, IT Hardware, Systems Integration and Distribution of Technology and Telecom products in India. The HCL team comprises 43,000 professionals of diverse nationalities, operating across 17 countries including 360 points of presence in India. HCL has global partnerships with several leading Fortune 1000 firms, including several IT and Technology majors. Its Business Model and Service Offerings:

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Infrastructure Services:

Services
Services Desk Incident Problem Change Configuration Release

Cisco Nortel Enterasys Avaya

Checkpoint ISS Cisco Symantec Trend Micro Net Forensics

Windows MAC Sun Linux

IIS I Planet Apache Web logic Web sphere

Windows UNIX Linux Midrange Mainframes

Oracle SQL Server Sybase DB2

EMC Sun IBM HP Hitachi Dell

MS Exchange Lotus Notes Custom Apps ERP/CRM

End User Computin g

Data Centre

Network

Security

Application Operations

Process & Tool Consultancy

RIM Service Offerings – By Indian Vendors.
Service Provider MonitoringMonitoring SupportSupportOperations Support Wipro TCS HCL Infosys Administration.Support SupportSupportDesk System Network SecurityDesktopE-mail ERP Database MainframeWintel Unix Help

High Medium Low

Provided to 10 or more customers Available and provided to 1 to 10 customers Under development or not a stand-alone service option

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9.4 Latest figures disclosed during Jan-Apr 2007
US$ Mn 2004 2005 2006-07 Q1 51 61.21 2006-07 2006-07 Q2 Q3

Wipro TCS HCL Infosys Satyam #Others

92 78.2 64.4 59.8 50.6 115

200 136.8 115.2 100.8 43.2 172.8

60 85.6 58.52 60.39 34 40 46.4 Discloses at Year end 16.74 18.3 20

% QOQ TCS Infosys HCL Wipro Satyam Cognizant
19 17 15 13 11 9 7 5 3

AMJ 05 to JAS 05 7.08 10.08 3.24 8.31 8.54 11.24

JAS 05 to OND 05 6.82 6.68 5.88 11.40 5.24 9.09

OND 05 JFM 06 9.13 6.08 7.69 7.52 6.76 11.13

JFM 06 to AMJ 06 7.65 11.30 7.94 3.69 7.33 17.97

AMJ 06 to JAS 06 8.21 13.03 10.29 10.67 9.32

AMJ 05 to JAS 05

JAS 05 to OND 05

TCS

Infosys

HCL

Wipro

Satyam

Cognizant

JFM 06 to AMJ 06

AMJ 06 to JAS 06

OND 05 JFM 06

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10. Methodology
Sample Characteristics Considered Within Each SWOT Category (Representative of Types of Considerations)

STRENGTHS
Advantages of proposition Capabilities, resources, assets, people Competitive advantages Organizational core competencies USPs

WEAKNESSES
Accreditations

OPPORTUNITIES THREATS
Business and product development Demographic shifts Political effects

Competitive strength

Economy (home, abroad) Environmental effects

Cost structure

Gap in the market/whitespace Geographical, export, import Global influences Industry or lifestyle trends Information and research Market developments and trends New markets, vertical, horizontal New source of labor

Disadvantages of proposition Distractions from core activity Gaps in capabilities Known issues and vulnerabilities Loss of key staff

Fiscal policy

Insurmountable weaknesses IT developments

Resources, assets, people Organizational structure Cost efficiencies and cost structures

Legislative effects

Market demand

Experience, knowledge, data Financial reserves, likely returns Cash flow, long-term contracts Brand and reputation Marketing reach, distribution, Awareness Innovation

Management cover, succession Morale, commitment, leadership

New entrants

New technologies, services, ideas

Obsolete technology Organizational culture

New USPs Niche target markets

Obstacles faced Seasonality, weather effects

Poor product and marketing mix Processes and systems and so on

Non traditional partners

Substitute products and services Sustainable financial backing

Location and geographical

Partnerships, agencies, distribution, channels

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11 References
Various references are taken at different levels of the research project which includes: • • • • Talking to concerned people in the corporate communications department at HCL Technologies and Wipro Technologies and TCS. Articles published by consulting firms like Gartner, IDC, Butler, Forrester, Everest etc. Interviews published in CIO Today, business week, Data Quest etc. Black Book launched by NASSCOMM

Websites like: www.hcltech.com www.hclisd.com www.wipro.com www.satyam.com www.tcs.com www.infosys.com www.gartner.com www.globalsourcing.com www.outsourcingdatabase.com

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