Around 2010, the global operations and infrastructure-services market opportunity will be about $75 to $80 billion. This is significant because today we are achieving just 5 percent of this potential.

This trend is not going to turn back because not even all the schools in the world put together have enough kids enrolled to match the demand that is already there. But we can only sustain so much exponential growth. If the market grows at the projected 40 to 45 percent over the next three years, it could relax to about 12 percent in the next couple of years. But even this is huge.

When we started outsourcing operations way back in the 1980s, we began with small setups in North America itself. This was mostly because of prevailing legislations at the time. And then when everyone started discovering India, so did we. India alone has about three million plus IT people as part of their population. And that is a huge resource.

India is already a leading provider destination for supporting the IT infrastructure of companies globally; yet, South Asia as a whole is expected to grow to meet this demand, with Vietnam, Thailand and Malaysia beginning to make their presence felt. In Eastern Europe, the Czech Republic, Poland and Hungary will emerge as strong provider destinations.

Global Services PREDICTIONS

The managed-services model will drive the market, and fewer and fewer companies will opt for the staff-augmentation model

Companies that have so far outsourced only application development and maintenance will be the prime contenders for sourcing infrastructure services

Companies will look to source services such as server management, security and network monitoring and data-center management.

One trend that I see in the IT-infrastructure outsourcing space is that companies will come to outsource more and more to offshore players (biggies such as TCS and Infosys, and smaller players such as Cybernet-SlashSupport) over the traditional players (such as EDS and CSC). Traditionally, infrastructure outsourcing carried with it the burden of “transfer of assets” with the provider taking on the assets and people of the customer company. However, going forward, customers are more likely to be lured by offshore players who are leveraging enhancements in communications infrastructure, remote-management tools and labor-cost arbitrage.

One advantage that smaller companies bring to the table is the extensive knowledge and background they have with open-source products. Open source is growing rapidly in the infrastructure space today, providing good solutions for little to no cost. Knowledge of these products is crucial for a service provider to meet the changing landscape and growth of open-source tools and products. Examples of this include spam filtering, load balancing and change management (at the application layer). Some of these companies have gone as far as developing operational monitoring tools with some of these open-source products.

Offshore IT-infrastructure service providers are creating a new business model to tap into the $80 billion opportunity. By 2010, offshore providers are expected to have a market share of 20 percent, up from 3 percent in 2005. According to Everest Research Institute, these companies are growing at a 61 percent CAGR, while the traditional players are growing at 7 percent CAGR.

Offshore operations will entail a push on standards and compliance. And ITIL (IT Infrastructure Library) is expected to be embraced by more and more global organizations. In fact, version 3 of ITIL was recently announced. COBIT, too, is expected to gain more currency. Moreover, if a potential partner has CMM Level 5 compliance, then it obviously has the discipline and procedures in place, and is qualified to help us in running our operations.

Currently most of the IT-infrastructure work that goes offshore is around helpdesk support and remote management of desktops and servers. Going forward, companies are likely to also offshore services in the areas of security monitoring, network monitoring and management, and even remote data-center management.

Attrition, however, will remain a cause for concern when working with offshore providers. One major concern we have when dealing with service providers today in any country is the personnel turnover rate. The normal average is something around 25 to 30 percent, though we’ve been lucky to have worked with companies that have an attrition rate of just 14 to 16 percent.    

Backed by 23 years of experience, Bill is currently driving the company’s approach to technological innovation, which he believes will give the airline competitive advantage by utilizing efficiencies to keep its cost structure low while enhancing customer experience. Virgin America has outsourced the remote management of its IT infrastructure to Cybernet-SlashSupport, a provider with offshore facilities in Chennai, India.