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Data centre outsourcing can work

By Seema Sindhu in New Delhi
April 18, 2008 11:26 IST
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The complexity of business demands, cost constraints, data growth and staffing issues are driving companies to outsource their data centre operations or specific tasks like email, web or help desk services to third-party vendors, also called managed service providers (MSPs).

These MSPs include Reliance Communications (RCom), Tata Consultancy Services (TCS), Bharti, Netcore, and Ctrl S. The biggest outsourcers are enterprises, banks and financial institutions at 28 per cent, followed by manufacturing -- 25 per cent, public sector -- 18 per cent, telecom -- 9 per cent and retail -- 8 per cent.

A data centre is essentially a computer room, a physical facility that allows a company to store and manage servers, networks and other computer equipment in a controlled-environment.

Ayyappa Nagubandi, Managing Director, Nowpos, a Hyderabad-based voice technology company, which outsources its data centre jobs to Ctrl S, admits it's cheaper "and saves recurring operation costs of managing an in-house data centre".

Niranjan Prasad, Director, Metamind Software, another Ctrl S client says: "Outsourcing jobs to a third party means reliable power supply, sufficient bandwidth, ample disk space, reliable security etc and not only server upkeep. It is a complete hostage facility. It hosts enterprise-level applications for, which we are not technically equipped."

According to a Symantec report, IT managers in the Asia-Pacific region rely on outsourcing data centre operations more than their peers.

Currently, India's data business is pegged at $983 million (around Rs 4,000 crore), which is a mere 2 per cent of the world market share. Web research firm Data Monitor predicts that this business will grow at 22.2 per cent per annum.

The Indian managed services market is currently dominated by telecom companies as it is a value-added attraction for their customers who may already be subscribing to various telecom facilities like broadband and leased lines.

"Globally, web hosting is an increasing trend. Besides that, data centre services are seeing more growth among other managed services, "Abid Qadiri, Vice President -product management (Managed Services), Tata Communications, says.

Soumitra Agarwal, Marketing Director-India, NetAppa -- partner of Tata Communications in providing storage services -- agrees with the view.

Shantanu Ghosh, Vice-President, India Product Operations, Symantec Corporation, notes that the Indian data centre market opportunity is expected to be driven by increasing supply and decreasing cost of Internet bandwidth and domestic companies hosting their mission-critical applications such as ERP and CRM in third-party data centres.

In the 2008-09 Budget, the government announced a Rs 275-crore (Rs 2.75 billion) package for setting up state data centres, which is expected to give this trend a further boost.

"As bandwidth prices fall to around Rs 6000-8,000 per Mbps per month, India becomes an attractive destination for hosting," says Sreedhar Reddy, Chief Managing Director, Ctrl S Data Centers, a Hyderabad-based service provider in data centre solutions.

Naresh Singh, principal research analyst in the enterprise network services and infrastructure group of Gartner, an IT research and advisory company, says: "The market will grow faster because of two developments: more and more foreign companies are hosting web content from India and the trend will grow steadily over 4-5 years."

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Seema Sindhu in New Delhi
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