Infra management is the new hot spot

Infrastructure management (IM) services is emerging as one of the fastest growing service lines for IT companies spurred by falling telecom costs and web-enabled tools that make remote management easier.

Over the last one year, IMS has been growing at over 60% for companies like Wipro and HCL Technologies, almost double their total sales growth, which is around 30%. The practice is still small for most companies because it has started gaining momentum only over the last couple of years.

“Earlier, there was a reluctance to outsource infrastructure management. Enterprises preferred nearshore operations because the costs of telecom pipes were high.

Security was also a big concern but now resources can be managed remotely without having to download any data because of web-based platforms,” said Ram C Mohan, vice-president and head of infrastructure management & technical support services, Mindtree Consulting. Mindtree launched IM and tech support services about nine months ago because of the growth being witnessed in the area.

Infrastructure management refers to the maintenance and management of the infrastructure of any company. The recent Idea Cellular-IBM deal is one such example where infrastructure management was significant part of the total contract that was outsourced.

In the context of many of the Indian IT companies, IM refers specifically to the management of the IT infrastructure and includes services like network management, desktop management and application portfolio management.

“IM has been growing at 50% year-on-year for IT companies. The entire infrastructure is managed remotely at a network operating centre,” says Hitesh Zaveri, analyst with Edelweiss Securities.

He estimates that in FY07, Tata Consultancy Services (TCS) could see well over 100% growth in this segment touching about $ 250 million, while Wipro would see 70% growth to over $ 250 million. For Satyam Computer Services and HCL Technologies too, the growth is estimated at well over 60%.

“Last year Satyam saw IM services grow by 32%. This year it should be around 62%,” according Zaveri. Companies are increasing their focus on IM because it also provides them with a predictable revenue stream.

“Unlike projects, where the revenues are based on the duration of the project, IM provides annuity-based revenues,” said Mr Mohan. Typically, IM functions also require the companies to provide an IT help desk that provides voice, e-mail and chat support. About 10-20% of the staff may be involved in such support services.