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With the networks spreading extensively into newer geographies like tier 2 and 3 cities and towns, and telcos talking about bringing their broadband networks home, the networks are getting increasingly complex and the job to manage these extensive networks is not getting any simpler.

Further, compounded with improved end-user response time through proactive management and reduced costs, there has been a visible trend to outsource the network management needs.

The network management services (NMS) market has witnessed acceptability and a certain maturity over the last year. Network management service providers are offering services like fault management, performance management, and root-cause analysis as part of their NMS.

Last year, the NMS market was pegged at Rs 171 crore. This year the market grew by around 37 percent to reach Rs 234 crore.

What's Driving the Market?
The major players in the NMS market in FY 2003–04 are HCL Comnet, Datacraft, GTL, Comsat Max, Wipro Infotech, and Sify.

While cost was a key reason for Indian businesses to outsource their network management needs, there were other compelling reasons too. While networks at an organization involve a combination of software tools, well-defined processes, and skill sets; the enterprise cannot arm itself on all these fronts. Thus, organizations saw perfect business sense to outsource to the service providers. Also, with increasing market competition and higher dependence on networks for day-to-day operations, NMS has found place as a sought-after service.

Especially with the call center/BPO and the telecom business opening up in India, there is an exponential demand for managing enterprise network services such as LAN, WAN, VPNs, VoIP, Intranets, and extranets for deploying various applications.

Service providers like HCL Comnet, Datacraft, GTL, and others offer value-added services like disaster management as part of their service offerings. Most NMS providers now offer 24x7 monitoring, fault management, administration, reporting, performance, engineering, end-user service assurance, and capacity planning.

Last year, service providers in the telecom segment were busy expanding their infrastructure to reach out to the customers and building capacity. With competition setting in, the trend is towards customer retention and providing better SLAs to the customer. As a result of which there has been more usage of fault and performance management tools by the telecom service providers.

Impact on Business
The benefits of outsourcing are too many, but the chief ones include: minimal capital expenditure, reduced operational expenditures, established SLAs, freedom from platform, technology obsolescence, and the freedom of maintaining a round-the-clock, expensive, in-house support staff.

The year 2004 will, if anything, see an increase in managed service outsourcing.

For an enterprise to provision its managed services internally is a resource-draining exercise, especially when those resources can be more effectively realigned toward business development and focus on core competencies.

Business is Coming From...
A significant expansion has occurred in the past two years in the number of vendors and the range of managed-service offerings, primarily due to enterprises that do not have core competency in that area.

Most NMS service providers claim to have received maximum business from BFSIs, call centers, and a few other enterprise in the last fiscal year 2003–04. Banking has been one sector where extensive networking was carried out, and a large number of PSU banks have gone a step further and networked their branches in the B and C class cities. Another influencing factor that resulted in the PSUs going in for more networks was the RBI guideline to consolidate branch operations.

While SBI and its associates have continued to increase their branches to 4500 spread across 385 cities, the private sector banks are going further into the tier 3 cities and setting up their networks there.

These are all end-to-end customers who are constantly getting into larger geographical spread and moving into tier 3 and 4 cities and towns.

As a result of the network spreading to remote geographical locations, service providers are also making their presence felt in these areas to provide efficient services to their clients. Datacraft now has its technical support team in tier 3 and 4 towns too, where they have their engineers to cater locally to the telecom companies and their other customers.

NMS Vendors Invest More
Most of the NMS vendors are investing substantially in technology and constantly upgrading their skill sets to address emerging issues in network management. The likes of Datacraft, Sify, HCL Comnet have gone ahead and tied up with various solution vendors to offer cutting-edge technology to their clients. They have not only invested heavily in the NOCs but also doubled the manpower into development-related activities.

Most of the NMS service providers offer new modules like bandwidth management, asset management.

This made most of them an ideal choice when it came to outsourcing for patch management, performance management, root-cause analysis, and service management.

Some other vendors like HP and MBT are also shifting focus to the NMS market and expecting a sizable contribution to their pie.

Upcoming Verticals
The NMS market is expected to further accelerate with the new emerging verticals. All this while, one witnessed high activity from the BFSI, call center, and enterprise segments. Now with the telecom sector opening up, the opportunity in the telecom vertical is what the NMS players are looking at. In the recent past, there was not much activity from the telcos as they were busy with retaining the volumes acquired. Now with broadband connectivity becoming the need of the hour of the day, and aggressive plans from telcos to role out broadband, telecom sector will significantly contribute to the NMS industry.

For HCL Comnet the total network and infrastructure management revenue for the last fiscal year (2003–04) was 122 crore. It manages over 15,000 network devices and 2,50,000 end
users. Of these, around Rs 80 crore
was pure network management
revenues.

In terms of infrastructure, all major players had heavily invested in
establishing their NOCs. HCL Comnet had invested over $10 million in the last year to provide support to its
customers.

One of HCL Comnet's big wins last year was AMD, which they bagged amidst competition from 15 other corporates vying for the same project. With over 100 global customers, names like Citibank, Philips, and HDFC feature amongst its valued customers. In the last quarter of last fiscal year, HCL Comnet bagged eight big deals from fortune 500 companies (NDAs). It also updated its data recovery center DR at Chennai to an operations management center (OMC). HCL today operates 14 OMCs in the country.

Datacraft continues to receive high revenues from its ongoing projects with SBI and its associates, where it has already connected around 4500 branches across 385 cities with 3500 ATMs on the network. Service management projects at Datacraft have seen investments to the tune of 60 to 75 lakh from the clients.

For Sify, Sutherland Technologies Ltd, Chennai and Federal Bank of India, Cochin have been the prominent revenue earners in the last fiscal year.

GTL has shifted its focus to managed services and remote management services and shown a growth of 30 percent in the networking business in spite of the dip in revenue numbers posted last year. Amongst the big orders, building of the data center for Institute of Chartered Accountants finds an immediate reference. Some other big projects are Agilent Technologies in Delhi, SCOPE (the BPO for Standard Chartered Grindlayz bank), and the BPO arm of Hewlett Packard. A new area of operation for GTL has been global maintenance services where it provides services for BPOs in US and UK for their remote-end equipment.

GTL's NOC (network operations center) at its Mahape, near Navi Mumbai facility is used for remotely managing the networks of about 10 of its blue-chip clients. Overall, they have more than 450 customers for whom they manage the networks.

By our Sr Reporter