IMS Market Next Big Wave In IT Outsourcing

Infrastructure Management Services (IMS) market could be the next big wave in IT outsourcing. Up to almost 40 per cent of the global IMS market is outsourced, which is around $150 billion, and while traditionally a big chunk of IMS was kept in-house or outsourced to near-shore locations, this trend is changing with increasing number of processes being offshored to low-cost locations. Also, while small and data sensitive companies (e.g. government bodies, defence and others) are not so much into outsourcing it, mid to large companies are increasingly outsourcing their IMS activities to reduce cost and focus on their core areas.

According to Zinnov, a management consulting company, the current global market size of IMS is estimated to be $370 billion and is expected to grow at a CAGR of 4 per cent over the next four years. In its latest study on Infrastructure Management Services (IMS), Zinnov said that the current IMS spend is expected to be around 12 per cent to 20 per cent of the total IT budget of the companies, which is definitely on rise in years to come.

IMS can be categorised into three segments: IT desk services, application management services and hardware support services.

Industry dynamics highlight that in 2007 India-based vendors have grown their IMS revenues by 70 per cent, while it still accounts for a small percentage (an average of 5 per cent to 10 per cent) of the total revenue of IT players. As a result of which some of the big IT companies like Wipro and Satyam have acquired international IMS companies to expand and grow their size to get international footprint.

Talking about the report, Anil Kumar, engagement manager, Zinnov Management Consulting Pvt Ltd, said, "In today's fast moving economy, organisations have come to realise that its best to concentrate on their core competencies and consider whether technologies can enable them to spin off those tasks that revolve around managing infrastructure, etc. to vendors that are best at it. But while the market truly has tremendous opportunity, it might take sometime for the ecosystem to evolve in nature."

"The outlook of clients so far has been quite defensive while offshoring, as a result of which they still prefer the offshore delivery centre, which gives them low cost predictability and has huge client overheads. Nevertheless, we clearly see Indian vendors getting active on this front and aggressively acquiring companies globally in this segment," he added.

Dwelling into the subject further, the report said that the banking financial services insurance (BFSI) vertical is the biggest contributor to the IMS industry followed by telecom in India. Out of the total $1.4 billion market in India, it accounts for about 43 per cent of the same. Also since IMS is non-core and considerably a larger service area, banks prefer to outsource it. Sighting examples it said that many BFSI MNCs such as RBS, HSBC, Standard Chartered have opened their captive in India to manage their IMS operations.

It stated that cost arbitrage and talent unavailability are the two major drivers for IMS outsourcing. Besides these, other factors like increasing dependency on IT with increase in regulatory pressure and willingness to expand contracts with existing vendors have lead to this growth.

http://www.efytimes.com/efytimes/26648/news.htm

Business Financial Services

IMS Market Next Big Wave In IT Outsourcing