APAC firms eye green in outsourcing contracts

As virtualization and server consolidation grow in region, businesses increasingly expect IT services providers to adopt energy-efficient IT, says analyst.
Written by Vivian Yeo, Contributor

As energy efficiency rises up the corporate IT agenda, more and more businesses in the Asia-Pacific region are casting an eye at their outsourcing partners to go green.

Energy costs, according to Andrew Milroy, Frost & Sullivan's ICT director for Australia and New Zealand, are escalating in many parts of the world, making sense for companies to effect operational changes that can reduce the demand for energy.

"It's becoming more of a worthwhile investment to invest in redesigning your data centers to be energy-efficient, using technologies that reduce the demand for energy like virtualization, and [introducing] carbon policies in the office such as having more frequent sleep time on laptops," he noted in a phone interview.

The growing popularity of energy-efficient measures, such as consolidating servers and tapping virtualization technology, is leading organizations to be more conscious of their outsourcing contracts. Virtualization, said Milroy, is at the moment spreading "like wildfire" in Asia.

"If you outsource nowadays, you're going to pretty much expect that your services provider is using virtualization technology. If your services provider is not doing that, they are not going to be offering you the best value for money," he pointed out.

Outsourcing clients, he added, are likely to look at the design of their partner's data centers, as well as the extent to which virtualization is being used when negotiating the contracts. "I would wager that companies which aren't doing that would be less competitive."

Some Asian governments, Milroy noted, are also starting to include green certification as a criteria in the evaluation of proposals. "If you're looking to [provide outsourcing services] to the government, demonstrating that you're adhering to responsible environmental policies is becoming an advantage, definitely in Australia, and I believe…in Singapore as well."

At the end of the day, however, the main driver of pushing green or energy efficiency in "much of Asia" is about reducing costs, noted Milroy. For instance, in evaluating a green partner, decision-makers "quite simply look at the cost", which is derived by comparing the amount of energy used for various activities.

The cheaper one is the one that's more energy-efficient," he said. "That's why green is in some ways a no-brainer."

That said, I. Vijayakumar, CTO at Wipro Technologies, told ZDNet Asia in an e-mail that green inclusions in contractual agreements "are currently not widespread in most of Asia".

Operational costs, however, have been a catalyst for adoption of green building technologies in India, he noted. Data centers are being modernized using such technologies, while the market has also been receptive toward virtualized data centers as well as shared IT services.

Among the key performance indicators used to assess the green performance of outsourcers are energy reduction and savings on operating expenditure, he added.

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