The dominance of
Indian offshore IT service providers is under threat unless
they can make the right investments in
cloud computing.
Indian suppliers have fared better than most during the economic
downturn. They have had the misfortune of
having to settle for single digit growth rather than the double
digit growth of their decade of existence. But unlike some of
their western competitors, they have not had to
cut costs to balance the books.
Robert Morgan, director at Hamilton Bailey which advises
suppliers, says the big Indian players have got plenty of cash but
what they do with it now could determine their future. They have to
get their cloud computing strategies right if they are to
continue to prosper.
"They can sit on it and ride out the recession or
be bold and buy someone," he added. "They could buy a network
provider to extend their range into cloud computing."
Threats will come from new players who want to deliver services
through the cloud, but if Indian companies make the right
investments now, they can sustain their presence.
Indian supplier Mahindra Satyam has a cloud computing strategy,
but
the $1bn fraud that hit the company earlier this year has made
it less of a priority.
"We were one of the first to adopt and build service offerings
around cloud computing and SaaS. The events of January 2009 have
relegated our efforts to the background and so it is a case of when
we re-start this," said a spokesperson.
The spokesperson did not rule out acquisitions. "We believe this
is an important area of focus in our growth strategy and we will
consider all options to supplement our capabilities in this
segment."
India's biggest offshore IT service provider Tata Consultancy
Services (TCS) is piloting a cloud computing service in India. It
is being tried out among Indian SMEs but the concept can be
transferred to other regions and up to corporate level if the
demand is there. One project is a core banking system in the cloud
aimed at small banks.
"We are providing services ranging from e-mail and networking
right up to applications such as HR and finance," said Pradipta
Bagchi, head of global communications at TCS. "All of this is
charged on a per-use basis."
Subhash Dhar, senior vice-president at Infosys, heads up the
company's Communications Service Providers business unit. He says
cloud computing is certainly an emerging space for Infosys.
"Acceptance of virtualised computing infrastructure and
applications are on the rise as clients struggle to do more with
less. However, we see a bigger opportunity in platform-based
services where enterprises can transfer their technology risk to us
and consume services on demand."
He said this model comprises good services which are highly
commoditised where it makes sense to share costs with others and
for services which are emerging.
"For these there is not a strong business case yet for
investment in technology and process infrastructure."
He said Infosys has launched four cloud services platforms and
has more in development.
Matt Havens, director at Indian supplier Cognizant Business
Consultancy, says the company is also building cloud computing
platforms. "We offer BPO services and these platforms will make it
possible to deliver these services via the cloud."
He says all system integration companies will have to change.
"Companies in this space make money from implementation and
maintenance of software. There are companies that will have to find
new ways to make money and cloud computing is a way to do so."
Bindi Bhullar, head of marketing and alliances, Europe at Indian
Supplier, said it will be surprising if any serious IT company does
not have a cloud computing strategy.