In an economic environment where contracts are fewer and smaller for Indian IT services firms, the infrastructure outsourcing (IO) business seems to have bucked the trend by providing a positive traction for the industry.
The IO market has been a key segment for the software services industry though the role played by Indian IT firms has largely been on periphery, with global giants holding a dominant status. However, the advent of cloud-based technologies has offered a potentially $30-40 billion market for Indian IT players.
Chandrashekar Kakal, senior vice-president and global head ? Business IT Services, Infosys, told FE, ?This is a new-found lever as it was earlier largely done in-house, but with today’s technology advancements, clients are looking at handing over entire infrastructure outsourcing.?
For top-tier firms such as TCS, Wipro, Infosys and HCL Technologies, the IO segment has been a positive growth driver. Wipro and HCL have over 20% of their overall revenue coming from this segment while firms like TCS and Infosys are investing more resources into this space.
Infrastructure services is one of the primary growth driver for HCL. Infrastructure management services (IMS) businesses, which contributed 26.6% to the company’s revenue during the July-September period, recorded a whopping 10.3% sequential revenue growth, of $296 million, during the period, noted Angel Broking.
For TCS, at the end of second quarter of FY13 fiscal, the IO segment recorded a sequential growth of 12.6%, which was much higher than the overall company average of 5.1%.
?It is a new area, which is seeing rapidly growth. Areas like remote management for security and database have a very good potential as more applications move to cloud. The overall infrastructure outsourcing market is estimated to be in the range of $30-40 billion,? said Pradeep Mukherji, president and managing partner, Avasant, an IT-BPO advisory firm.
This positive momentum has also got to do with the changed business tactics of the Indian IT companies.
Mukherji feels Indian IT firms need to have a strong base in both software and hardware to manage large enterprises and attract more deals in this space. ?Among top-tier IT firms, HCL is very aggressive in this space. Wipro and TCS also has good presence. Traditionally, both HCL and Wipro have expertise in hardware and software network, which has helped them gain traction in this space,? he added.
The new push to this market has been coming from a growing trend among outsourcers, who are now more comfortable combining IO deals with other services like application development, testing and BPO. It has become a sweet spot for Indian IT firms as these are traditionally strong areas for them.
