GS100: 2011 Global Services Compendium
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Many mid-market companies are considering outsourcing IM using one of the emerging models. Outsourcing to a third party increases complexity and prompts the need for a stronger governance structure– which infrastructure operations to outsource; how to develop SLR (Service Level Requirements); how to do the transition; etc. A growing number of companies are looking at outsourcing infrastructure based upon ITIL v3-Based Outsourcing Framework. ITIL v3 provide a set of best practices and recommendations that can be applied to the outsourcing lifecycle.
The market in developed economies is fairly matured while emerging economies are witnessing new business models and new providers. According to Rolf Jester , Analyst, Gartner , “In the developed economies of Asia Pacific (APAC)—Australia, New Zealand, Singapore and Hong Kong—the market is relatively mature, with modest but long-term, sustainable growth and a relatively small group of providers currently dominating the market.” He adds, “Most multinational providers are investing in this growth region now, and even developing new service models, and non-traditional providers are entering the market, introducing disruptive emerging business models based on utility as-a-service or cloud offerings.”
Newer offshoring locations are coming up. The McKinsey Quarterly report states that unlike India, whose talent pool for mainframes is limited (though growing rapidly), Brazil has strong capabilities in this area, and a number of global vendors run mainframe centers of excellence there. Pan- European companies that require French- or German-speaking support staff have their sourcing options in Africa and Eastern Europe, which may have deeper pools of talent to meet these specialized needs.
Major Deals
Most of the big deals witnessed in the infrastructure management space, over the last few months, have come from diverse industry verticals. M&A activity saw a renewal in 2010. Large deals continue to skew the average deal size. Year 2010 has already seen bigger names like Thomson Reuters, Singapore Exchange, Merck Sharp and Dohme (MSD) outsourcing their infrastructure installation and management in multi-million dollar deals.
In some other major deals, HP signed five-year Infrastructure outsourcing services agreement valued in excess of $400 million with BP. In it's another deal HP underwent agreement with SHI International for providing infrastructure services for its cloud center. In December 2010, HCL signed remote multi year end-to-end IT Infrastructure Management engagement with pharmaceutical company Purdue Pharma L.P., in the same month Wipro secured 5 year IT infrastructure services contract from with Electricity North West Limited. Capgemini UK plc, part of Capgemini Group signed five-year, multi-million pound outsourcing contract with Anglian Water, UK’s leading providers of water services. Wärtsilä Signed a three-year outsourcing services agreement with HP.
New Delivery Models
Infrastructure service offerings that are being offered today are mainly of four types, based on the deal characteristics. These are: Infrastructure Outsourcing (IO), application hosting, Infrastructure Managed Services (IMS) and RIMO. IMS and RIMO trends are close in nature with the major difference today in the scope, extent of labor arbitrage and the way the suppliers view and position it.
Innovation in new remote management tools and technologies has led to the emergence of the asset-light RIMO, in which both the companies and outsourcing vendors enter into a short-term contract. Unlike the Asset-heavy model, Asset-light model does not entail transfer of asset ownership and IT personnel to the vendor. The asset-light model is being used proactively by providers to reduce cost and time frame of implementation. Due to the lower capital investment involved, it has created opportunities for low-cost offshore providers to enter the RIMO market.
At times value added services like financial leasing, vendor-managed inventory, etc. are also offered by service providers.
GS100: 2011 Global Services Compendium
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