Indian IT powerhouses must be bold in the cloud

The dominance of Indian offshore IT service providers is under threat unless they can make the right investments in cloud computing.

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.

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