Cloud computing: Just was the doctor ordered for Indian IT Outsourcers
February 5, 2010
Cloud computing is considered to be the next big thing and increasingly Indian IT outsourcers are trying to grab a piece of the cloud. After all, they are in a race to broaden the scope of their outsourcing services in order to compete for the high level work that usually goes to larger western rivals like Accenture, IBM and Hewlett-Packard.
Hence, major Indian IT players are investing in two major cloud computing areas, Platform as a Service (PaaS) and Software as a Service (SaaS), while a third cloud computing layer in the form of Infrastructure as a Service (IaaS) is a lesser focus. Moreover and as noted in a recent article in Business Today, these tier 1 Indian IT outsourcers have begun the following cloud computing initiatives:
- Cognizant is rolling out an internal cloud platform that will host and test cloud computing applications.
- Infosys is researching cloud applications and offering consultancy services related to cloud computing.
- TCS is piloting cloud computing services for both small and medium sized businesses.
- Tech Mahindra is piloting a cloud computing service framework for a large independent software vendor.
- Wipro is setting up a ‘public’ cloud in its data centers and a ‘private’ cloud for its employees.
In addition, the Business Today article noted that cloud computing may turn out to be just what tier 1 Indian firms need as such services fit well with the quality at competitive costs model offered by Indian IT outsourcers. Moreover, it was noted that IDC is projecting that cloud computing could be a US$42.2 billion a year global business by the year 2012. In other words, 8.5% of the projected US$493 in IT spending by the year 2012 compared with 4% (US$16.2 billion) out of the total US$383 billion spent on IT services today.
Meanwhile, a recent Wall Street Journal article pointed out that while Indian IT outsourcers were once content to accept any work given to them by the likes of Citigroup and other big MNCs, the days of earning 30% annual revenue growth from doing such work are over with. Hence, Indian outsourcers are being forced to widen the scope of the services they offer and are aggressively pursuing on-site work (such as managing entire IT departments or networks) and running external data centers for clients which will give them a foothold into cloud computing. In other words, they are trying to tie all of their services into one end-to-end outsourcing solution for their clients and not just the really big ones.
Take the example of Infosys. The Financial Times recently noted that Infosys only focuses on the world’s 1,000 leading companies who have annual revenues of US$5 billion or more. By entering the realm of cloud computing, they will be able to tap the mid-market and clients who earn US$1 billion plus in revenues and help to head off the impact from both the financial crisis and pressure from Western competitors. Moreover, the Financial Times noted that Infosys gets 62% of its business from the USA where protectionism is on the rise (Hence, they plan to double the amount of work they do in emerging markets over the next three to five years) and 35% of its business comes from financial services. In other words, cloud computing may be just what the doctor ordered for Indian IT outsourcers – helping them to remain competitive and to grab a piece of the next “big thing.”