Indian CIOs are breaking their in-house data center habit

Economic pressures, rising wages, and virtualization are finally pushing data center managers to open up to the idea of outsourcing, breaking their conservative mindsets after years of access to affordable IT resources.
Written by Mahesh Sharma, Correspondent

Conservative Indian IT managers may be forced to adopt a more open approach toward managing their infrastructure as they face the need to deal with macro factors such as slower economic growth, rising wages, and the emergence of virtualization technology.

Indian IT managers are moving toward more outsourcing.

In an interview with ZDNet, Frederic Giron, Forrester's vice president and principal analyst serving sourcing and vendor management professionals, said CIOs in India are defined by one major characteristic: a strong attachment to their infrastructure assets.

Indian IT managers still do not trust third parties to fully manage their perceived crown jewels, and they only see the data center as a place to park their surplus infrastructure, Giron noted.

This conservative attitude has stifled companies' innovation and India's data centre industry, he added.

"In emerging countries, they believe they have this advantage by owning these big boxes and a huge throng of servers and they're still reluctant to transfer the ownership of assets to third-party service providers," said the Forrester analyst.

While they leveraged third-party service providers to host their infrastructure, they did not go beyond that to the next level of hosting their applications on third-party service providers.

Intel's enterprise sales director, R. Ravichandran, said while the market was crowded with providers of all shapes and sizes, of the close to 100 third-party data centers primarily spread across Indian cities such as Mumbai, Chennai, Bangalore, and New Delhi, there were only a handful of the state-of-the-art Tier 4 facilities. The majority were Tier 1 data centers.

Changing cost dynamics

This trend shows no signs of abating as Ravichandran pointed to a report by Frost & Sullivan which predicted that by 2018 there will be almost nine million square feet of data center floor space — a three-fold increase from today's real estate.

"Enterprise customers will say 'hey, this is a non-core app, and I don't need to put it in my data center, so I'll give it to my service provider'," said Ravichandran.

However, this cannot continue indefinitely, noted Giron, who pointed to the more recent trend of Indian corporations outsourcing their IT operations to highlight the macro pressures that will force the country to more efficiently manage their hardware infrastructure.

First, the huge pool of cheap Indian talent meant the traditional way to manage infrastructure was to throw bodies at the problem, but because IT salaries are not going down, there will be a day several years from now when it becomes too expensive to maintain the status quo.

"The major approach was that as the infrastructure and complexity grows, you add more people to maintain the service level and quality for the business," he said.

Secondly, Indian IT managers will be forced to change their ways as they virtualize their servers to cut capex costs, an exercise that requires less floorspace and more sophisticated skills, software and data center resources to manage the complex equipment.

Indeed, a survey of Indian CIOs last year, conducted by consultancy firm AMI-Partners, found that only five to ten percent of IT infrastructure was virtualized, and the technology will potentially "s&mode="details&news_id=290"" target="_blank" class="c-regularLink" rel="noopener nofollow">redefine the Indian IT landscape.

Finally, Ravichandran said that India's slowing economic growth and businesses' overseas expansion ambitions, will put a greater focus on how technology can be used to get more from less.

"The IT department never had the pressure to improve their metrics and invest in the right tools, processes and development of skills — there's a lack of initiatives such as lifelong learning or continuous training of IT department in India," he said.

The principal analyst added: "The result was that now you have this strong metric-driven businesses with spending activities in different cities and abroad, plus they're looking at they can leverage new technologies such as big data, but they turn back and look at the orchestration of IT department and think, 'maybe we don't have the right skill sets internally.'"

There is currently a gap in terms of the business metric and IT metric, but that is closing, said the Intel executive.

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