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Managed Service Providers to Increase Outsourcing to India

According to a recent Nasscom-McKinseys report, titled The Rising Remote Infrastructure Management Opportunity, the Remote Infrastructure Management (RIM) market stands at USD 96-104 billion, out of which USD 13 to 15 billion is likely to be contributed by India by the year 2013. Though, India’s share currently stands at only USD 3 to 4 billion. This growth in RIM will also result in the creation of around 350,000 additional jobs in the industry. This clearly indicates that the trend of outsourcing by small to medium-sized businesses (SMBs) and managed service providers (MSPs) is going to increase dramatically in the near future.

The growing trend of outsourcing a part of their RIM services and even mission-critical processes to an off-site team located in India reflects the confidence of businesses in the Indian IT sector. Moreover, the increased thrust of the government to spend more on e-governance and upgrading technology has spurred the confidence of MSPs that want to outsource their non-core services to the country. Access to sound technical infrastructure will also boost the overall RIM market significantly. Even small and medium sized vendors would be able to use cutting-edge technology to deliver services such as managed security, managed network services, NOC, and Help desk.

The managed IT services market in India is set to hit USD 3.8 billion by 2013, up from USD 1.6 billion in 2009. The reasons for such a boom is not just the cost savings offered by outsourcing managed IT services, it is the use of such services as a tool for growth and business optimization. Many SMBs and MSPs who outsource their managed services are realizing the value of having a cost-effective alternative in order to provide seamless and round-the-clock services to their consumers. This delegation of non-core and yet complex IT services frees up businesses to concentrate on core-verticals which are the drivers for growth.

Flexibility is another advantage that outsourcing managed services can provide wherein the company, whether it is an MSP or SMB, can convert capital expenditures to operational expenditures. This is because of the increasing ability of the off-site team to provide quality services by the utilization of cutting-edge technology.

Although historical data suggests that small operators could not cope with the dot-com bust in the 90s, things would be much different in the near future. This is due to advances in technology, better network infrastructure, improved customer premises equipment, and better solution architectures. Moreover, better-quality standardization is observed in today’s business models and contracts which helps in lowering operational costs.

Sifting through the facts and figures, it becomes easy to understand that SMBs and MSPs are set to benefit from such an increase in outsourcing managed IT services to countries such as India. It would not only help in scalability and better ROIs in the short-term, but would also be useful for growth in the long run.

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Posted on: May 30th, 2013 by admin No Comments

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