NETWORKING SERVICES: Infrastructure Catalyst

Networking market is one of the fastest
growing markets, with plug-and-play becoming noticeable and with
mid-sized market leading to commoditization of it. Last year, it saw
an overall growth of 29% in the sales of networking products alone.
The services market business grew due to the upward swing in its
product business. Major players like Cisco, Juniper Networks, HP,
Brocade, Iron Port, Cyberoam, Fortinet, SonicWALL, Check Point,
Websense, TANDBERG, Avaya, Radware, Avocent, ATEN, CommScope,Tyco,
Panduit, DAX, APW, NetRack, Valrack, etc, drove their revenue from IT
projects in telecom, financial institutions, hospitality, education,
SMBs, and the government sector. With the overall space being
dominated by technological advan ce ments, R&D expansion also
came into picture in different geographies of India.

Wireless is one of the buzzwords in
networking services and is attributed to the large penetration of
mobile devices like smartphones, tablets, etc. The deployment can be
in both private and public environments such as educational campuses,
offices, hotels, airports, hospitals, retail outlets, and manu fac
turing facilities. Emergence of cloud computing and virtualization
also portrays the maturity of Indian market towards conso lidation,
making IT infrastructure more effective. With 3G coming into picture,
there is a huge demand of upgrading existing infrastructure that was
built to meet 2G needs, and 4G too doesn't seem far away.
Therefore, the telecom companies would seek for unified or converged
platform to provide applications such as live video services from a
single platform, thereby signing the utter need for networking
services.

Networking services tend to change
y-o-y depen ding upon the infrastructural growth. Moreover, customers
focus more on the solutions rather than just integration, which will
add up to the growth of networking services. Customers also look for
more features to be added in their basic network while migrating to
cloud.

HUGE OPPORTUNITY FOR SIS

Many system integrators spoke about the
oppor tu nities they possess in the networking services arena.
Talking on the same footnote, Ravi Verdes, MD, Frontier Business
Systems, said, “The networking services market in India is one of
the fastest growing markets in the APAC region. It's heavily
dominated by turnkey infrastructure projects but is also showing good
growth in the government and BFSI sectors. 3G roll out, cloud com
puting and virtualization and captive data center market is expec t
ed to slow down and hosted data center market in India will be one of
the growth engines in future (predicted CAGR of 31% by 2012),
dominated by the telecom players, would be the major decisive factors
for networking services.” Frontier Business Systems has worked
along with almost all vendors and brands in the market with multiple
solutions offered. It specializes in end-to-end solutions, switching,
rou ting and wireless solu tions, WebEx and TANDBERG (business video)
for collaboration, WAN optimization, data center and virtualization,
storage networking amongst others.

Verdes further added on the key market
drivers, “The router market is expected to grow in the coming years
because of a seemingly insurmountable amount of data, video, and
voice traffic that is hitting networks. Wireless for last-mile
connectivity in rural India and unwiring cities will be a key factor
driving the growth of the networking market. Also, the advent of
technologies like 3G and WiMax would be the other growth drivers. WAN
optimization will continue to be a fundamental part of modern IT
architectures as Indian enterprises start rolling them out from now.
The routing and switching market that remained flat in the last
couple of years would see growth fuelled by technologies such as
cloud computing and virtualization. High-end switching in data
centers will also drive the market.”

The trend in 2010 was the convergence
of ethernet and fiber channel. Companies started migrating to 10GbE
from multiple 1GbE connections, which resulted in growth in demand
for 10GbE fixed swi tches and chassis based routers and switches.
This is the trend that will dominate in 2011 and in the years ahead.
Video will be a key player and industry estimates that 91% of
internet traffic will consist of video by 2013, and overall IP
traffic will grow 40% per year, according to Frontier Business
Systems.

Another prominent player of the market,
Targus Technologies generated Rs 45 crore business from overall
revenue of Rs 130 crore and expect Rs 55 crore revenue from this
year. Commenting on the their services and growth factors, Col
Balwinder Singh, director, Targus Technologies states, “Our network
services consist of RIM, net work monitoring, integration support,
AMCs and outsourcings killed resources. Products for routing,
switching, security, wireless, unified communication, cloud,
structured cabling, etc, are all part of the over all net works story
for Targus. Today, custo mers are deman ding high uptimes and
imposing heavy penalties on outage. 99.99% uptime is a norm in most
of the tenders, since the network has become critical for any
organization. The market is moving towards consolidation by means of
mergers and acquisitions and we believe that the near future will
hold this for everyone. The major driving factors for the networking
services will be global alliances, consolidation and application
development. The market is set to change in the next 3-5 years.”
Singh adds, “Networking services are going to change drastically.
Today, the network services are purely on layers 1, 2 or 3.
Increasing trends for network services are moving towards layer 7 and
application level, which is proven by the hype of cloud computing. We
believe that network services will become much more than hardware
based services, and pay-as-you-go services will increase.”

In totality, different segments saw a
different kind of investment patterns. From the last 6-7 months
telecom segment was little dry owing to the fact that Department of
Telecommunications' (DOT) changing norms and compliance, and
therefore there were more orders from the government sectors from
last 2 quarters. Commercial business seemed to equally spread out.
Central Data Systems from Bengaluru, which is one the prominent
network integrators earned Rs 40 crore revenue last year, out of
which networking services accounted for 40%. It expects the same
ratio this year, however, its revenues are expected to grow at around
25%. K Subramanya, CEO, Central Data Systems speaks about the
investment patterns of the consumers and mentions, “Customers are
investing in areas mandated by their business needs like security,
data centers, virtualization, collaboration and infrastructure/net
work as a service. Another trend in the market has been the
realization amongst the most segments about the need to conserve
capital and convert big time spend to operational expenditure.”

With the bandwidth costs (internet)
coming down, this will majorly con tribute to the services in the
network domain. Propagating
information will be the key to any business as we are observing ERP
and CRM automations happening all around the network, which are ought
to be very robust and secure with proper functionalities. Shell
Networks from Hyderabad is an emerging player in this segment, which
generated entire revenue from the net work domain. It feels the
demand of convergence of voice and video on the IP platform. Quality
of service and assurance on RoI on the network deployed, is one of
the major driving factors.

AL Srinath, CEO, Shell Networks says,
“We work predominantly with Cisco Systems, since we are able to get
the entire suite of offerings from one single vendor; switching,
routing, physical security, network security, voice solutions and
video solutions. We also work with EMC for storage solutions and we
work with Commscope for cabling requirements. Commscope offers
intelligent cabling solutions which are a value proposition to the
client. We have tied-up with Emerson to address the physical
infrastructure requirements of the data center.” Government
projects are one of the key areas in the net wor king services, where
one can find a lot of oppor tu nities and e-governance projects in
future, in fact, this is the area for which most of the system
integrators eye for. Bengaluru based WEBCOM Technologies operates
mainly in government, defense, PSUs, and power sector and generates
40% from Networking segment. It claims to know the networking segment
from the past 23 years. Anatharam V Varuyar, MD, WEBCOM, says, “In
this sector, customer wants end-to-end solutions. They are not
looking for mere cabling contractors. They need vendors, who have
track record of large number of years. Most of the decisions are by
tenders, which is very slow. Some of the deals take as much as one
year to get the tender matured. Only organizations with deep pockets
can survive here. It is very difficult for new entrants to come in.
It does not mean that WEBCOM has deep pockets. Mostly we need to
compete with NSIs but one of the concerns is that government
is also moving towards e-procurement, reverse auction, etc, which is
reducing our margins.”

ROAD AHEAD

If we look at the networking services
market there is a good deal of traction from customers as the IT
infrastructure landscape is changing but there are some constraints
too. One of the major barriers is again availability of trained
man-power and further retention. Recent weakening of rupee and
European crisis as well as stagnant US market has affected the
IT/ITeS sector in India, and so does networking services market.
Second, due to bureaucracy in the gover n ment sector, decision
making is delayed, impacting SIs. Education to the consumers plays an
important part.

Verdes said, “Government regulatory
hurdles especially when it comes to voice applications. Lack of
infrastructure such as roads and power in tier-2 and tier-3 cities
hamper delivery efficiency of services especially where there are SLA
based delivery commitments, thereby, indirectly contributing to
higher deli very cost and lower effici e ncies. Another han dicap has
been inconsistencies in local rules and regulations.”

Singh said, “Customers are very price
conscious and for a growing company like Targus, it is essential that
we charge our customers for the professional services that we
provide. Yet, smaller companies are able to be more price competitive
than us and the clients sometimes compromise on quality for price.”

THE SOLUTION CHAMP

By closely observing the networking
industry and measuring all industry standards, DQ Channels found
Frontier Business Systems as the
solution champ for this year.