Of the Global Services 100 ranking of the top 10 global infrastructure services providers, released by us in February this year, nine providers are offshore players. The only traditional player to have made it to the list is Affiliated Computer Systems (ACS).

In a similar ranking done by us in 2006, the top 10 positions were equally divided between the traditional onshore biggies and the offshore players. (See box for a listing of the Global Services top 10 infrastructure services providers of 2007 and 2006).

This is not to say that the biggies — IBM, EDS, HP, ACS, CSC and Accenture — are losing their edge. Customers continue to engage them in large infrastructure deals — most often the size of the deals signed with these providers is much larger than those contracted with the offshore players. Companies such as ACS is managing the IT infrastructure of almost 300 companies, including GlaxoSmithKline, Burger King, WellPoint and General Motors.

The dramatic shift that the Global Services 100 study saw that indeed the market is seeing a swing toward the rookie offshore players. Customers are beginning to choose offshore service providers such as HCL, TCS and Infosys, who entered the market less than five years ago, over the biggies for managing their infrastructures.

“In most of our deals such as the ones with Autodesk, Terradyne and Skandia, we have competed with the big five outsourcers. And we have bagged the deals,” says Maninder Singh, AVP, Business Development, HCL Infrastructure Services Division.

Small Gets Big
Traditionally when customers have outsourced the management of their data centers, servers, networks, desktops, security, applications, 24x7 helpdesks, etc., it has required the service provider to take on the assets and people of the customer company. This “asset heavy” model meant that only large service providers with the capacity to absorb the assets were contenders for such outsourcing. This, effectively, was a barrier to entry for the smaller offshore players.

Meanwhile, having established their communications infrastructure and armed with remote management tools, the offshore players — brimming with confidence with their success in developing and maintaining applications for global companies — began to explore the infrastructure-management space. They put the labor cost arbitrage twist to infrastructure management and began offering to remotely manage customers' helpdesks and desktops. Over time, they also took over the management of networks and data centers.

Providers like HCL and Wipro Technologies of India created a new business model of Remote Infrastructure Management (jargonized as RIM) to tap into the $80 billion global market. And over time the other three Indian biggies, Infosys Technologies, TCS and Satyam, and a host of others such as Cognizant, Patni, SlashSupport, iGate and Microland entered the market. Singapore and Malaysia in Asia and Venezuela and Brazil in Latin America also saw many providers setting up operations. (See table for a more comprehensive list of offshore service providers.)

Their value proposition is simple: They do not buy assets off the customers; instead they deploy a large portion of their staff offshore bringing in cost advantage. Through this model offshore providers offer customers savings of up to 40%–60%, according to Vinu B. Kartha, Principal, Tholons, an outsourcing advisory firm.

Beyond Vanilla
As the offshore players' processes around remote infrastructure management have matured, customers are getting more value, other than vanilla cost savings, from their offshore operations. And in the true style of the industry, this “value” is being termed “transformational.”

One company that seems to be benefiting from transformational outsourcing is AMD, the chip manufacturing giant. Way back in 2003 (yes, for remote infrastructure management, 2003 is long back) in a big bang approach, AMD offshored all its IT-infrastructure services and SAP support for its North America offices to HCL.

Top 10 Best Performing Infra Service Providers
GS 100 2006	GS 100 2007
IBM	ACS
HCL	Sutherland
Infosys	TCS
EDS	Perot
TCS	Infosys
ACS	HCL
HP	Neoris
Wipro	Cognizant
Perot	Ness
Satyam	Microland