In the current IT outsourcing scenario total infrastructure outsourcing (TIO) services provide the backbone for systems of business engagement and provides the platform for new digital solutions for enterprises. The trends in market show that enterprises in order to improve customer experience prepare their infrastructure for the new digital age where cost savings is not the only motivation for outsourcing.
The trends in TIO is evolving as the infrastructure outsourcing industry has come a long way by providing a platform for delivering expected results in the present IT landscape. Along with networks, storage and applications, TIO providers offer features such as autonomic computing, self-service (cloud models), predictable analytics and automation in their IT offerings. Currently, these are viewed as some of the main drives for TIO adoption. Further, flexibility has been another hallmark of infrastructure outsourcing while enterprises seek to optimize customer relationships, gain new customers and perform new levels of innovation.
According to Forrester Research Inc. survey on Global Priorities, 75% of enterprises seek to improve customer services and 64% were identifying options for reducing IT costs. Another prediction by Technaivio’s market research shows that IT outsourcing is likely to grow at CAGR of 6% in 2016 and expected to increase. With TIO adoption, enterprises are likely to focus on core competencies and realize improvements in operational effectiveness along with effectiveness to remain competitive. IDC press release in May 2015 on worldwide analysis on outsourcing shows that India based outsourcing providers captured nearly a quarter of all worldwide outsourcing deals in 2014.
Looking into the market for infrastructure outsourcing, CtrlS Data Centers expects the following trends will shape the TIO markets globally and in India.
TIO trends in Global scenario: Security is viewed as one of the main elements that will likely influence TIO strategy globally. The proliferation of IoT is becoming more prevalent, which poses several security risks and hence outsourcing providers should address this concern on priority.
Centralization by TIO providers is another area which promises to offer services to all internal departments and eliminates dependency on multiple IT outsourcing vendors. This technological development is likely to provide increased TIO adoption globally.
In 2016, TIO vendors are expected to focus on centralizing IT service delivery to improve service quality, productivity with reduced costs. According to industry sources, hybrid cloud services is another area likely to have a positive effect on infrastructure outsourcing which is estimated to grow at CAGR of around 19% including $70 billion market for the private cloud in 2018.
Infrastructure outsourcing clients will recognize the need for contractual innovation in order to overcome lack of innovation and lack of technical expertise. According to Forrester estimates the global TIO market is expected to reach $187.5 billion worldwide. The overall trend globally promises good potential for outsourcing providers in the years to come.
TIO trends in Indian scenario: IDC study on worldwide outsourcing highlights on the Indian outsourcing industry making significant inroads in global IT outsourcing arena. India’s significant market share is 23% of the total outsourcing market. This is mainly due to incorporating new service delivery and transformative capabilities such as business analytics, social media and support for mobility. These areas have enhanced local capabilities and resources for India to strategically compete with well-established global players in TIO services.
According to Gartner, the data center infrastructure market in India is expected to reach $2 billion in 2016. This is an increase of 5.2% from 2015. Within India the IT infrastructure market is forecast to reach $698 million and enterprise networking will continue to be the biggest segment in terms of revenue, expected at $963 million in 2016.
According to NASSCOM, TechSci Research, IT and BPM sector is expected to grow at CAGR of 9.5% to $300 billion by 2020. This trend is influenced by strong Indian expertise and India is viewed as an important outsourcing destination according to the Indian Brand Equity Foundation (IBEF). This potential can be capitalized by infrastructure outsourcing providers.
IBEF report mentions that Indian IT firms already have 640 IT delivery centers across the world in over 78 countries as of 2015. In addition to this, Indian SMBs are gaining more traction as this sector offers high potential for TIO and this market is estimated to be around $250 billion by 2020. The increased focus on big data activities and mobility, software defined networking is expected to show high adoption by Indian enterprises which are driving TIO trends.
From the above trends India is clearly viewed as a major infrastructure outsourcing destination in this year and beyond. Infrastructure outsourcing spending in India will continue to grow with data center modernization, disaster recovery and business continuity and automation along with focus on software defined networking being the priority for Indian infrastructure outsourcing providers.
In summary, TIO trends indicate lot of potential for outsourcing providers in the years to come. India is poised to be an effective player in this arena due to its skilled manpower, IT expertise and knowledge and resource availability.