Infrastructure Management Moving Offshore

By Allen Bernard

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Over the past 12 months or so, more and more companies, large and small, are turning over the monitoring and limited management of their infrastructures — networks, applications, servers, databases, datacenters — to offshore firms in India and Asia.

Typically, offshoring has been a sore point with application developers looking for work, call center operators and help desk personnel, but now IT administrators of all stripes may have to start looking over their shoulders as well.

"For a lot of people, when they use the term offshore they often think of call centers or speaking to someone in India for tech support," said Barry Rubenstein, program manager for Application Outsourcing and Offshore Services at IDC. "But the market for IT services for offshore is larger than the market for business processes."

The primary reason? Cost.

It is 40-to-60 percent cheaper to have an India-based admin looking over alerts screens than paying someone in the States, said Ahmar Abbas, SVP and principle of Global Infrastructure Management at Slashsupport, a India-based IT services company.

The annual growth rate of its infrastructure management (IM) business is topping 100%, which Abbas attributes to an increased comfort level among the company's existing customers to have the management and their networks working miles apart.

"The framework has always been there," he said, "but recently people are kind of becoming more comfortable with the fact that it doesn't make a difference whether it's somebody 10 miles from the data center or 1000 miles from the data center. It's what I call the concept of the 'neutralization of geography' has set in with the clients."

Most of the company's new business is coming from existing customers expanding their contracts with the company, but it is in the process of starting a marketing push to garner new business from new customers.

So far, there is no clear trend as to what companies — based on size, industry, or revenue — are turning to offshore providers, said John Merryman a senior consultant at Glasshouse Technologies, a provider of storage management solutions. But, as is often the case, the financial services firms as leading the way.

"A few of the top five U.S. banks are definitely looking at infrastructure management as an offshore potential," said Merryman. "But at the other end of the spectrum … small and medium businesses are offshoring infrastructure management, or at least considering it in a very big way."

For Merryman, the reasons do include cost savings, but the trend also represents a logical progression of moving non-essential operations to offshore providers.

"What I'm definitely seeing is that some companies are just looking further and further down the stack," he said. "So they're looking at database administration, data analysis type work, storage and administration, and even server and network administration as follow on potential targets."

For Abbas, the pitch is to sell his customers on the benefits of freeing up stateside personnel for more lucrative activities that lead to better business/IT alignment. "It's resource allocation that gives you business alignment. I think cost is the absolute last thing that is being considered."

Either way, like the outsourcing of business processes and development work, it looks like IM offshoring is a growing trend and likely one that will be around for awhile.

"I haven't seen this type of growth rate sine the '90s," said Abbas.