Managed IT Services Spending Grows 19% From 2006

Small and medium businesses in India are on track to top $900 million in IT
services spending, including both product support and professional services.
This is up more than 19 percent from last year, which is a similarly high growth
rate from the year before. This comes from the latest report by New York-based
Access Markets International (AMI) Partners. Overall, the report found,
long-term managed services are gaining strength even as traditional sectors like
applications development and integration are losing traction. In India, managed
IT services consist of end-to-end out­sourcing, and discrete managed services.
The latter dominates the managed IT services expenditure of SMBs currently.

“Managed IT services constitute a good chunk of the overall IT services
package, which is growing faster than average market growth,” said Nirupam
Chaudhuri, Research Manager, AMI Partners.

“In most cases, the primary point of contact for SMBs is the IT channel
partner where a system/network integrator doubles up as the managed services
vendor,” said Chaudhuri adding, “A good working relationship needs to be
established first. The CIO or head of an SMB ideally wants to have a single
point of contact while dealing with various issues related to IT infrastructure
and facilities. Till now annual maintenance contracts (AMCs) for hardware and
software applications have constituted the bulk of SMB managed IT services spend
in India. Gradually even annual maintenance contracts will mature into
full-fledged discrete outsourcing deals, where the deal would entail risk
sharing, 24x7 support and facilities management services.”

SMBs expect clear service level agreements (SLAs) from services providers,
including network uptime, adherence to SLA clauses, and fault-free integration
with existing business and IT processes and applica­tions. “Cost reduction, RoI
and openness to out-tasking are becoming important driving factors for such
engagements,” said Chaudhuri. “SMBs are also looking at speed of delivery, a
standards-based approach, opti­mization of existing resources, performance
measurement and proactive management before deciding infrastructure services
contracts,” added Chaudhuri

In India, the competition among vendors in desktop manage­ment and routine
net­work management services is huge. The number of deals in applications
management engage­­ments, which entails SLA driven reactive/proactive
appli­cation mainte­nance, applications optimization, upgrades automa­tion
services, is growing. There is also traction for fault, configuration,
accounting, performance, and security (FCAPS)-based network manage­ment from
service providers. The upper tier of MBs has begun availing network operation
centers-based remote infras­tructure management facilities as well.

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