The worst downturn since the Great Depression is boosting the outsourcing of critical IT infrastructure management services with more companies now exploring new ways to save dollars. The risk appetite for global chief information officers (CIOs) has increased considerably over the last one year because of cost pressures, IT services firms say. This is fuelling the infrastructure management market, which is expected to touch $180 billion by 2013. By far it is the largest offshorable bucket, ahead of application development maintenance and BPO.

Indian IT services firms and multinationals are therefore busy expanding their infrastructure footprint in India. They are hiring, besides continuing investments in processes and tools. Indian firms are also winning larger deals, competing effectively with MNC infrastructure services powerhouses.

In the last few weeks, a flurry of announcements point to growing enthusiasm of Indian service providers. Mid-tier firm MindTree acquired the business of Chennai-based firm 7Strata, a remote infrastructure management (RIM) services provider. It will help MindTree enter remote desktop management services.

And Infosys, slow to get onto the infrastructure bandwagon, won a big account in Microsoft. India?s second largest software exporter will provide internal IT services like helpdesk, desk-side services, IT infrastructure and applications support to Microsoft. Infrastructure management is already one of Infy?s promising service lines and accounted for 7.2% of overall revenues, up from 6.3% in FY2009.

Market research firm Everest says that Indian suppliers have been fairly successful in extending the benefits of labour arbitrage to infrastructure outsourcing and have seen high growth rates in the businesses. The top tier players have invested in training its infrastructure employees in industry-standard certifications like ITIL and ISO 9001:2000, 27001.

?We believe they are well poised in continuing to grow their share of business coming from infrastructure outsourcing services,? says Gaurav Gupta, principal and country head of Everest Group. ?Indian players like TCS, HCL and Wipro are increasingly signing deals much larger in size than the average remote infrastructure management outsourcing deal size. This indicates they are actively targeting large deals and therefore competing for infrastructure deals with traditional players like IBM, HP and CSC among others,? he adds.

India?s third largest IT services exporter Wipro has been an early bird in the infrastructure market. Currently, the service contributes about 21% of it overall revenues. The firm says it is seeing a healthy deal mix and a pipeline of deals which are medium to large size.

?The IT infrastructure outsourcing to Indian service providers has matured over time. Few years back, it was only the remote infrastructure management work that was being considered for offshoring,?

Deepak Jain, senior vice-president and global head of Technology Infrastructure Service at Wipro

Technologies says.

But the high quality of work and best-in-class processes employed by Indian outsourcers in delivery of RIM services are enabling them to now deliver end-to-end IT infrastructure management services. ?You might have heard about large IT outsourcing deals being awarded to Indian IT companies in the last 12-18 months by global conglomerates,? points out Jain.

In the history of offshoring, the application development maintenance piece was the first to move away from customer premises; BPO came next. Infrastructure services is the third wave. ?We are tapping into a fairly big market place,? says Ludger Rohlmann, vice-president of ITO Delivery Operations in HP?s Enterprise Services wing. ?We are expanding very rapidly our bestshore footprint. We are hiring at significant speed,? he adds.

India has the largest footprint in HP?s ?bestshore? network of capabilities that also includes countries in Latin America, Asia, East Europe, North Africa, and Ireland. India services almost 20% of HP?s infrastructure management customers. The country has the largest service desk, 25% of all customer mail boxes and 20% of all storage managed by the company is done out of India?an indication of the maturity of infrastructure services delivered out of the country.

?In the last one and half years, customers are accepting higher degree of risk for higher reward. Customers were earlier cautious about exploring offshore. Now, we are seeing new wins with pretty high best shore components coming along from day one. There is acceptance that it works,? Rohlmann, who is based out of Germany, says.

The cautious approach of global CIOs had to do with the critical nature of infrastructure services. ?If an application for a specific business goes down, only that part of the function is affected. But if the network goes down, the entire business is affected. It is mission critical,? the HP executive says.

So CIOs took time to understand if IT infrastructure is offshorable. They started offshoring in pockets. Low risk work such as end user support services were the first that came to India. However, what really fuelled and is still fuelling the market is the improvement in the country?s telecom industry.

?Earlier, we had issues of managing networks for clients. The network within the country used for delivery need to be robust. The enabling infrastructure in India has become significantly robust with the telecom revolution,? Rohlmann says.

This meant that data centre management, server and storage management services could be offshored. Now, even more critical services such as network and messaging management are becoming routine.

The rapid strides made in the communication infrastructure in the country will also enable Indian IT services firms to go after transformation projects, Wipro?s Deepak Jain says. ?We believe that Indian IT companies will now be moving a step further after establishing the credibility of having done large transformational deals in the domestic market as well as global markets in industries like telecom, infrastructure, finance and having made investments in building datacentre capabilities globally. This will qualify Indian service providers to not only manage the run and operate side of the IT infrastructure, but also partner with customers in business and IT transformation projects,? he emphasises.