Market Research Report : IT Managed Services market in India 2012

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IT Managed Services (ITMS) market in India, one of the most lucrative business segments within the IT services market is currently experiencing a steady growth and with holds a strong potential for the ensuing years. Post global slowdown, organizations are gradually recovering and hence majority of the CIOs are scouting for cost effective IT solutions, which in turn has shaped the growth curve for ITMS in a splendid fashion. With more and more organizations moving to cloud computing, the market will further enjoy ample growth aspects. Currently, the market is flooded with a plethora of Managed Service Providers (MSPs) and channel partners, wherein they offer a comprehensive range of services, applications/softwares. Competition in the market is stiff and the vendors are constantly revamping their market strategies in order to garner a better market position.

The report begins with an introduction section, defining the concept of IT managed services and differentiating it from the traditional outsourcing model. The section clarifies on the various categories of services generally opted by users. It also briefs about the prevailing service packaging trends and characteristics of the market.

IT managed service market overview of the report talks about the Indian market as a whole and highlights important factors driving the market, most popular services prevailing in the market, briefs about the competitive scenario and elaborates on the market size and forecasted growth figures in a graphical manner. Primarily, the market is boosted by the increasing demand for cost effective IT solutions and services amongst organizations. The market is segregated according to business segments and service type. It also provides forecasted growth figures for these individual segments. Basically, the market can be segregated according to the user’s business type and the type of services opted by users. The section features a detailed portion on these individual segments wherein it graphically represents growth figures till the year 2016. The section also features a section which has been derived after a thorough primary research, wherein vendors specializing in different types of service categories have been mentioned which will help readers to get an insight about the current service offerings. Moving on, the report talks about the SMB market space wherein it mentions the prime factors driving the market, service preferences as well as the market size and forecasted growth figures till the year 2016.

Remote managed services section elaborates on the definition, benefits, product offerings and the competitive scenario in India. It lists down the most widely used remote managed services in the market. Each of these individual services has been elaborated in details to give the readers a clear view of the service and derive their pros and cons.

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Market Research Report : IT Managed Services market in India 2012

  1. 1. IT Managed Services Market – India IT Managed Services Market IndiaApril 2012
  2. 2. Executive Summary  The IT Managed Services (ITMS) market in India was valued at INR xxx bn in 20‐‐ and is expected to attain a CAGR of 24.5% to reach around INR yyy bn in 2016  Small and Medium Businesses (SMBs) contributed about INR xxx bn in 20‐‐ and is expected to Market shell out INR xxx bn by the end of 20 in the ITMS market 20‐‐  Primarily, Managed Service Providers (MSPs) provide services in the form of on‐premise, remote and cloud based managed services``  The typical process framework followed by client organizations prior to adopting managed  yp p y g p p g g Transition  services can be enlisted as: Plan  Phase I – Step 1  Phase II – Step 2  Phase III – Step 3 p Service   Currently, a prominent trend in the ITMS market happens to be associated with the pricing models  Delivery  of adopting the services Model  Major pricing models include: xxx, aaa, yyy, zzz, ,,,,, Key Managed Service ProvidersCompetition EMC Corporation iGate Corporation Cisco India  Dell India IT MANAGED SERVICES MARKET ‐ INDIA.PPT 2
  3. 3. •Introduction•Market Overview•Remote Managed Services•Remote Managed Services•Staff Augmentation vs. IT Managed  Services•Transition Plan •Cost Component•Service Pricing Model Service Pricing Model•Market Influencers•Major IT Managed Service Vendors•Channel Partner Landscape Ch lP L d•Case Studies•Strategic Recommendation g•Appendix IT MANAGED SERVICES MARKET ‐ INDIA.PPT 3
  4. 4. The market is here to stay in India wherein it will exhibit steady growth and offer ample business scope to vendors IT Managed Services Market ‐ Overview• Post economic slowdown, enterprises and small businesses are gradually recovering from the impact and hence are  working on bottleneck IT budgets which in turn is persuading them for IT managed service adoption • Primarily, services including monitoring and management are the most popular services opted by users   Server and network monitoring  & management happens to be the two most preferred services opted in the Indian market   Effective business strategies can be developed by vendors to tap these two service segments in particular• Competition in the market is tensed and vendors in the market are constantly revamping their strategies in order to  survive the competition and establish a better market position  s r i e the competition and establish a better market position• Hyper active industry verticals such as BFSI, manufacturing and government happen to be the early adopters of ITMS,  whereas IT/ITeS and logistics are anticipated to be the upcoming adopters of ITMS  On the other hand, telecom happens to rely entirely on IT outsourcing method  IT Managed Services – Market Size & Growth INR bn a b c 24.5% d e 0 2010 2011 2012e 2013e 2014e 2015e 2016e IT MANAGED SERVICES MARKET ‐ INDIA.PPT 4
  5. 5. SAMPLE Market Segmentation – Various CategoriesMarket Split – Business Segments (20‐‐) Market Split – Service Type (20‐‐) a c 4% a 19% b b c 45% 38% 58% 36% 1 2 3 1 2 3 INR bn INR bn a a b b xyz xyz c c d d e e 0 0 2012e 2013e 2014e 2015e 2016e 2012e 2013e 2014e 2015e 2016e IT MANAGED SERVICES MARKET ‐ INDIA.PPT 5
  6. 6. IT Managed Services – MSPs  SAMPLE •MSPs operating in the ITMS market in India have managed to carve a niche for themselves across various  categories in the market •This trend in the market can be tabulated as below: Category Managed Service ProviderCategory 1  MSP 1, MSP 2, MSP 3Category 2 …Category 3 …Category 4 …Category 5 …Category 6 …Category 7 … IT MANAGED SERVICES MARKET ‐ INDIA.PPT 6
  7. 7. Remote Managed Services – India Overview SAMPLE  Remote Managed Services ‐ Introduction • Remote Managed Services (RMS) refers to the management of information technology services from a remote  location by a third party service provider under a mutual agreement and objectives location by a third party service provider under a mutual agreement and objectives • Some of the benefits, that can be reaped post implementation of RMS comprise of the following:  Benefit 1  Benefit 2  Benefit 3 … …  A 24 x 7 service coverage on complex IT situations, that would otherwise lead to significant losses and prolonged downtime • As of now, eminent RMS vendors now offer tailor made solutions for their clients hailing across a varied industry  verticals and segments  The major vendors operating in the RMS market segment comprise of MSP 1 and MSP 2 amongst others j p g g p g Some Major Remote Managed Services ‐ India Service Type 1 Service Type 2 Service Type 3 Service Type 4 IT MANAGED SERVICES MARKET ‐ INDIA.PPT 7
  8. 8. SAMPLE Managed Services Market Insights – Vendor Perspective • Service delivery approach is the most crucial aspect for a vendor in order to establish  a better business and earn significant profitability Service Delivery  • In lines with service delivery, some of the important factors identified in the market  Approach are as follows:   Insight 1  Insight 2 • The preferred delivery medium in the IT managed services market happens to be xxx  • Vendors and channel partners jointly xxx so as to increase the sales by a large extent Insight 1 Insight 1 V d Vendors provide xxx to channel partners which are further tapped by channel partners for  id h l hi h f h db h l f sales  • The prime challenge faced by channel partners in particular happens to be the issue  Insight 2 of xxx, wherein xxx  • The magnitude of the challenge increases when xxx  IT MANAGED SERVICES MARKET ‐ INDIA.PPT 8
  9. 9. Transition to Managed Services from Staff augmentation –Typical Framework SAMPLE  Client organization Client organization prior to IT managed service adoption Phase I Phase II Phase III ABC XYZ PQR • Step 1 • Step 1 • Step 1 • Step 2 • Step 2 • Step 2 • Step 3 • Step 3 • Step 3 •… •… •… •… • ... •… •… •… •… Third party service provider, hosts all IT infrastructure on behalf of  Third party service provider hosts all IT infrastructure on behalf of Vendor organization client organization and in accordance with the SLA IT MANAGED SERVICES MARKET ‐ INDIA.PPT 9
  10. 10. Phase X – xyz Identification xyz SAMPLE  Phase X Step 1 Step 2 Step 3.a Step 4 Step 3 Step 5 Step 3.b Step 6 IT MANAGED SERVICES MARKET ‐ INDIA.PPT 10
  11. 11. Prime reasons driving the IT managed services market can  SAMPLE be chalked down on the basis of their priority and impact Prime drivers propelling the IT managed services market can be illustrated as below:Priority High Priority, Low Impact g y, p High Priority, High Impact High Priority High Impact Driver 1 Driver 2 Driver 2 Driver 3 Driver 4 Driver 6 Driver 6 Driver 8 Driver 5 Driver 7 Low Priority, Low Impact Low Priority Low Impact Low Priority, High Impact Low Priority High Impact Impact IT MANAGED SERVICES MARKET ‐ INDIA.PPT 11
  12. 12. Drivers  SAMPLE Drivers and Challenges – IT Managed Services Market India Challenges • Xxxx  • xxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 12
  13. 13. SAMPLE IT Managed Services ‐ Snapshot Vendors•Player 1 Channel Partners•Player 2•… …•… •CP 1 Users •CP 2 •… •… •User 1 •User 2 User 2 •… •… IT MANAGED SERVICES MARKET ‐ INDIA.PPT 13
  14. 14. Major Public Companies ‐ Summary Net Profit/Loss200,000 Size of the Bubble represents Market Capitalization in INR mn180,000160,000140,000 2,939,069.1120,000100,000 80,000 1,296,979.2 60,000 1,080,891.4 40,000 20,000 98,911.6 0 54,124.0‐20,000 ‐200,000 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 Total income aaa bbb ccc ddd eee IT MANAGED SERVICES MARKET ‐ INDIA.PPT 14
  15. 15. Public: Domestic Company – MSP (x/x)Company Information SAMPLE  Offices and Centres – India Corporate AddressTel No. New DelhiFax No.WebsiteYear of IncorporationTicker SymbolStock Exchange Head OfficeProducts and ServicesProducts and ServicesCategory Products/Services Key People Name N Designation D i ti IT MANAGED SERVICES MARKET ‐ INDIA.PPT 15
  16. 16. Public: Domestic Company – MSP (x/x)Financial Snapshot i i lS h SAMPLE  Key Ratios K i Total Income Net Profit/Loss y‐o‐y change  Particulars  2011 2010 2009 2008 INR mn INR mn (2011‐10) 1.5 1.1 0.15 Profitability Ratios Operating Margin 1.72 17.85% 16.12% 11.13% 12.55% 1.0 10 0.8 08 0.10 0 10 Net Margin 1.44 12.91% 11.47% 7.90% 8.73% 0.7 0.7 Profit Before Tax Margin 0.89 16.08% 15.19% 9.69% 10.58% 0.5 0.05 Return on Equity 2.25 13.09% 10.84% 6.98% 9.66% Return on Capital Employed 2.19 15.09% 12.90% 7.29% 10.17% 0.0 0.00 Return on Working Capital ‐269.73 216.24% 485.97% 20.81% 24.23% 2008 2009 2010 2011 Return on Assets 1.22 7.61% 6.39% 4.18% 5.53%Financial Summary  Return on Fixed Assets 14.18 92.08% 77.90% 50.43% 59.37% Cost Ratios• The company incurred a net profit of INR 0.14 mn in FY 2011, as  Operating costs (% of Sales) ‐1.41 71.23% 72.64% 77.14% 75.67% compared to net profit of INR 0.08 mn in FY 2010 Administration costs (% of  0.79 32.38% 31.59% 32.36% 30.94%• The company reported total income of  INR 1.1 mn in FY 2011, as  Sales) compared to INR 0.8 mn in FY 2010 compared to INR 0 8 mn in FY 2010 Interest costs (% of Sales) Interest costs (% of Sales) ‐0.20 0.85% % 1.05% % 1.30% % 1.19% % Liquidity Ratios• The company earned an operating margin of 17.85 per cent in FY  Current Ratio 7.00% 1.12 1.04 2.05 2.04 2011, an increase of 1.72 percentage points over FY 2010 Cash Ratio 3.45% 1.06 1.02 1.82 1.76• The company reported debt to equity ratio of 0.72 in FY 2011, a  Leverage Ratios decrease of 3.22 per cent over FY 2010 Debt to Equity Ratio 3.22% 0.72 0.70 0.67 0.75 Debt to Capital Ratio b i l iKey Financial Performance Indicators 554.42% 0.08 0.01 0.16 0.18 Interest Coverage Ratio 36.32% 21.15 15.52 8.65 10.76 Indicators Value (24/04/2012) Efficiency RatiosMarket Capitalization (INR mn) Fixed Asset Turnover 4.94% 7.06 6.73 6.31 6.69Total Enterprise Value (INR mn) Asset Turnover 5.80% 0.58 0.55 0.52 0.62 Current Asset Turnover ‐0.68% 1.73 1.74 1.33 1.39EPS (INR)EPS (INR) 1.16 Working Capital Turnover ‐60.50% 16.58 41.98 2.60 2.73PE Ratio (Absolute) 23.88 Capital Employed Turnover 7.20% 1.00 0.94 0.87 1.09 Improved Decline IT MANAGED SERVICES MARKET ‐ INDIA.PPT 16
  17. 17. Public: Domestic Company – MSP (x/x)Key Business Segments SAMPLE  Key Geographic Segments 723,138 650,942 758,960 1,061,703100% 100% 54% 53% 54% 53% 78% 76% 75% 74%50% 50% 5% 5% 4% 4% 31% 31% 29% 28% 13% 4% 14% % 4% 17% 4% 19% 4% 11% 5% 11% 5% 12% 6% 13% 6% 0% 0% 2008 2009 2010 2011 2008 2009 2010 2011 aaa ccc bbb ddd aaa ccc bbb dddKey Recent DevelopmentsDescription  Newsxxxxxxxxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 17
  18. 18. Major Private Companies ‐ Summary Net Profit/Loss60,000 Size of the Bubble represents Total Assets in INR mn40,00020,000 SAMPLE  SAMPLE 0‐20,000 ‐20,000 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Total Income aaa bbb ccc ddd eee fff ggg hhh IT MANAGED SERVICES MARKET ‐ INDIA.PPT 18
  19. 19. Private: Domestic Company – MSP (x/x)Company Information SAMPLE  Offices and Centres – India Corporate AddressTel No.Fax No.WebsiteYear of Incorporation Head OfficeProducts and ServicesProducts and Services Bangalore B lCategory Products/Services Key People Name N Designation D i ti Note: The list of products and services is not exhaustive IT MANAGED SERVICES MARKET ‐ INDIA.PPT 19
  20. 20. Private: Domestic Company – MSP (x/x) Financial Snapshot i i lS h SAMPLE  Key Ratios K i y‐o‐y change  Total Income Net Profit/Loss Particulars  2011 2010 2009 2008 (2011‐10) INR mn INR mn Profitability Ratios Operating Margin ‐2.06 9.29% 11.34% 4.37% 2.02% 6000 400 5021.8 5021 8 Net Margin ‐2.22 6.29% 8.51% 9.85% 5.09% 3599.6 300 Profit Before Tax Margin ‐1.79 10.25% 12.04% 13.72% 8.02% 4000 Return on Equity ‐2.88 16.78% 19.66% 20.24% 9.30% 2574.5 200 Return on Capital Employed 56.29 160.17% 103.88% 30.00% 14.87% 1824.1 Return on Working Capital 2.69 50.11% 47.42% 58.43% 29.82% 2000 100 Return on Assets ‐2.83 16.72% 19.56% 20.11% 9.17% Return on Fixed Assets ‐11.54 33.97% 45.50% 44.12% 19.88% 0 0 Cost Ratios 2008 2009 2010 2011 Operating costs (% of Sales) 2.05 90.62% 88.58% 95.18% 97.85% Administration costs (% of  N.A. 0.00% 0.00% 0.00% 0.00% Sales) Financial Summary  Interest costs (% of Sales) Interest costs (% of Sales) N.A. 0.00% % 0.00% % 0.00% % 0.00% % • The company incurred a net profit of INR 315.83 mn in FY  Liquidity Ratios 2011, as compared to net profit of INR 306.46 mn in FY 2010 Current Ratio ‐10.06% 1.39 1.55 1.49 1.41 Cash Ratio ‐41.24% 0.80 1.36 0.84 0.59 • The company reported total income of  INR 5021.79 mn in FY  Leverage Ratios 2011, as compared to INR 3599.62 mn in FY 2010 Debt to Equity Ratio ‐34.00% 0.00 0.01 0.01 0.01 • The company earned an operating margin of 9.29 per cent in  Debt to Capital Ratio b i l i ‐33.89% 0.00 0.01 0.01 0.01 FY 2011 a decrease of 2.06 percentage points over FY 2010 Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A. Efficiency Ratios Fixed Asset Turnover 0.78% 5.35 5.31 4.06 3.67 Asset Turnover 15.45% 2.63 2.28 1.85 1.69 Current Asset Turnover 13.69% 2.23 1.96 1.77 1.59 Working Capital Turnover 42.66% 7.89 5.53 5.38 5.50 Capital Employed Turnover 15.24% 2.64 2.29 1.86 1.72Source: Annual Reports; Databases; Netscribes Analysis Improved Decline IT MANAGED SERVICES MARKET ‐ INDIA.PPT 20
  21. 21. SAMPLE  Private: Domestic Company – MSP (x/x) Key Recent Developments Description  News Overview SolutionsSource: Company Websites IT MANAGED SERVICES MARKET ‐ INDIA.PPT 21
  22. 22. Channel partners in the ITMS play a pivotal role in the success of a business SAMPLE •Maintaining a proper business alliance with channel partners has become the most prominent business  model for IT managed service vendors in India•The business model is tried and tested and proves to be the substantially lucrative amongst other  business strategies  b i t t i•Owing to the importance of channel partners, selection of these partners has become a very vital  aspect for vendors and hence setting up of a fixed criteria is currently in vogue An ideal channel partner can judged on the basis of the following attributes xxx xxx xxx xxx xxx xxx xxx xxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 22
  23. 23. Channel Partner Selection Process SAMPLE The overall channel partner selection process can be segregated into 6 phases, which can be illustrated as below; Partnership initiates 6.   xxxx 6 xxxx 4.   xxxx 5.   xxxx 3.   xxxx 2. xxxx 1.  xxxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 23
  24. 24. Benefits – Channel Partners Access to  SAMPLE  Vendor Community Brand Image Enhancement• xxxx Better Profit Margin • yyyy • zzzz IT MANAGED SERVICES MARKET ‐ INDIA.PPT 24
  25. 25. SAMPLE Benefits – Channel Partners Trend 1 Trend 3 Trend 2 IT MANAGED SERVICES MARKET ‐ INDIA.PPT 25
  26. 26. Major Channel Partners (1/x)  ABC  SAMPLE  XYZHeadquarters HeadquartersOffices OfficesWebsite: Website:Phone No. Phone No.Fax FaxE‐mail E‐mail Business Highlights Business Highlights Business Highlights Business Highlights• xxx • xxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 26
  27. 27. Case Study x Client Organization SAMPLE  Industry IT Vendor xxx xxx xxx Case: Network Management Requirements Solution Benefit • xxx • xxx • xxx Technology Used xxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 27
  28. 28. SAMPLE Strategic Recommendations (1/x) xxx xxx xxx• xxx • xxx IT MANAGED SERVICES MARKET ‐ INDIA.PPT 28
  29. 29. Thank you for the attentionThe IT Managed Services Market in India report is a part of Netscribes’ Information Technology Series. For more detailed information or customized research requirements please contact:E‐Mail: sales@netscribes.comE M il l @ ibPhone: +91 33 4064 6214Netscribes (India) Pvt. Ltd. is dedicated to disseminating information and providing quick insights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries onAbout NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. IT MANAGED SERVICES MARKET ‐ INDIA.PPT 29

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