IP VPN to grow by 31.6% CAGR within 2009: Frost & Sullivan

The Indian IP VPN market is expected to grow at a compound annual growth rate
(CAGR) of 31.6% between the 2003 and 2009 according to Frost & Sullivan
(F&S). Having witnessed an estimated growth of 24% in 2004, the IP VPN
market is expected to witness a growth explosion in 2005 with MPLS driving the
IP VPN market, largely due to its ability to offer frame relay features with a
lesser-cost incidence.

According to F&S, the growth rate is likely to stabilize from 2006
through the forecast period. At the broader level, data currently dominates
around 90% with voice accounting for 10%. This pattern is likely to shift in
favor of voice once most verticals embrace IP VPN with voice traffic going up to
20%, by the end of 2009.

"Though FMCGs, BPOs and healthcare companies spearhead IP VPN in India,
the market is yet to see the banking vertical adopt IP VPN despite the growth in
online banking and e-commerce," said F&S, India ICT Practice Director,
Alok Shende. The agency predicts that globally, IP VPN services will gradually
play a larger part in the network landscape as more businesses become aware of
its inherent advantages.

The estimated market size of the global managed IP VPN market is expected to
grow to an estimated $20.506 billion in 2005. The IP VPN market in Asia Pacific
region amounted close to $2.1 billion in the year 2004 and is expected to grow
at a compound annual growth rate of 20.4% to reach $5.15 billion by the end of
2009.

With corporates building their WANs and network expansion on the anvil, VPN
is expected to take off in a big way in India. F&S estimates the Indian VPN
service and equipment market slated to grow to $86.2 millions in 2005.

The major segments for potential use of VPNs are finance and banking, the
marketing arms of manufacturing or service industries for connecting various
regional offices and logging in sales figures, online bookings and
order-processing through major distributors.

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