The network management system has been actively outsourced in India since network complexity is becoming a growing problem, along with the shortage of skilled IT staff. The demand for network management services has provided the much-needed market opportunity for Indian corporates. System integrators and hosting service providers are all getting into the act and jumping on to the bandwagon.

The network management service (NMS) provides a secure architecture for upbeat remote network monitoring and management of storage networks round the clock. It helps maximize network availability, decrease the likelihood of serious outages, and provide information to help optimize network performance.

Network management covers an extensive area-security, ensuring that the network is protected from illicit users; performance, eliminating bottlenecks in the network; and reliability, making sure the network is available to users and responding to hardware and software malfunctions.

According to VOICE&DATA estimates, network management services grew from Rs 709 crore in FY 2006-07 to Rs 886.3 crore in 2007-08, a 20-25% jump, which is quite healthy. HCL Comnet topped this segment registering revenues of Rs 275 crore in FY 2007-08 as compared to Rs 220 crore during the previous fiscal. Wipro Infotech registered revenues of Rs 261.2 crore and registered a 39.9% growth as compared to Rs 186.6 crore during the previous fiscal. Datacraft follows Wipro Infotech with revenues of Rs 159 crore and a 33% growth.

Major Deals
Wipro Infotech, one of the leading players in network management services, bagged three major deals. A major contract is from Pantaloon Retail, which has ambitious growth plans to enhance its geographic footprint, and will increase the number of its outlets to over 2,500 in the next five years. To support these strategic initiatives, Pantaloon has selected Wipro for delivering streamlined IT operations and comprehensive infrastructure management.

Wipro Infotech's other contract was with FamilyCredit, the consumer finance organization of Societe General Consumer Finance in India, for managing its IT infrastructure and applications management. The company's third major deal was with Saudi Arabian Airlines to deliver next-generation IT infrastructure.

On the other hand, DataCraft bagged its largest deals in BFSI verticals with companies like SBI, HSBC, and CitiBank. Other major contracts include the ones with Genpact, and VSNL.

Growth Drivers
The Indian market currently shows a very strong trend toward outsourcing, and it appears that the market will accelerate in the coming days and months. Increase in centralized applications, quality of last mile connectivity, and boom in infrastructure investment are major growth drivers of the network management services this fiscal.

Adoption of core banking solutions, even by smaller cooperative banks, is accelerating the requirement for network and, therefore, for network management solutions. Besides, managing complexities of large organizations with huge and widespread networks as well as managing users' requirements is fueling the growth of network management services.

Due to e-enabling taking place across all industries to connect to the end user, there is a considerable increase in the demand for additional bandwidth. On the other hand, bandwidth cost has come down drastically, thus resulting in the rapid growth of the network management system.

Wireless communication is also driving the growth of network management services significantly. Today, most organizations are moving from fixed to IP-based telephony. Therefore, there is a requirement for the use of network management solutions to establish voice quality. All these developments have acted as growth drivers for the network management market.

The biggest contributor to the NMS segment was BFSI including banking, finance, securities, investment, and insurance. The other verticals that contributed heavily to this segment were IT/ITes, FMCG, and telecom service providers.

Roadblocks
Despite the huge growth potential, the network management services market faced a number of challenges. Firstly, the ever-increasing complexity of networks was a major concern because this makes monitoring network performance and quality of service a challenge.

Secondly, security of data is becoming a crucial issue. As networks become complex and a large number of devices get added to the network, the biggest threat to the network is security, or the lack of it. IT managers are also becoming security conscious and have begun demanding newer and better firewalls and intrusion-detection systems.

In converged networks, the demand for network management is higher due to the need to manage real-time traffic. Moreover, there are SLAs that are in milli-seconds, and today's tools based on MIB polling with 5-minute intervals are too slow to manage these types of application traffic.

Another major concern is the attitude of enterprises that are not open to spending on network management services.

Though the network is a vital component of business and without it business operations are susceptible, the cost of network management is higher than what organizations would want it to be.

The Road Ahead
The future of the network management industry looks quite bright. There will be a definite shift toward a multi-sourcing model for management of services. Some core processes will still be retained through their internal teams, but with pressure from business users demanding 100% availability, the outsourcing boom will takeoff.

The network management services segment will see system integrators aligning with service providers to manage networks of enterprise customers. With globalization, as well as companies' focus on global standards, the network management services market is bound to grow and the potential is huge and bullish.

Arpita Prem
arpitap@cybermedia.co.in