Wipro 'fast follower' in European market for managed services

There will be "incresing competition" in the maturing market for managed services in western Europe between "global trendsetters" and "fast followers", according to an IDC study for 2004.

Managed services, also called desktop and network management services, bridge the gap between the entry-level services such as hardware support and more complex engagements such as IT outsourcing.

According to IDC, the managed services market in Europe is set to grow from $9.3 billion in 2003 to $13.3 billion in 2008, which represents a compound annual growth rate of 7.3 per cent.

The report also assesses the different vendors offering services in the area on the basis of alignment to market opportunity and ability to gain market share. The grid comprises five major divisions "" global trendsetters, fast followers, vendors in transition, local stars and niche players.

While the global trendsetters grid is occupied by players by HP and IBM, with their huge brands and more or less developed managed services offering, the fast followers level is occupied by homegrown Wipro and Computer Science Corporation (CSC). Wipro's Technology Infrastructure Services (TIS) which handles managed services for the company clocked revenues of $20 million in fiscal 2004.

Around 63 per cent came from infrastructure management and 12 per cent from system integration and consulting. A hefty 85 per cent of the infrastructure management revenues came from the UK alone and the practice itself has been growing YOY at 40 per cent.

Capgemini features in vendors in transition while LogicaCMG is included in the list of local stars. Niche stars are players who concentrate only on certain aspects of the managed services segment and includes Dimension Data.

With increasing competiton and a lessening of significant differentiators between players, there is sign of cost containment among clients leading to demands for more flexible contracts and multi-vendor strategies.

Offshore service provision is becoming increasigly common with almost all the vendors having an offshore setup. Also, there is more productisisation of managed service offerings as more vendors offer off the shelf solutions along with custom made ones.

With more and more vendors appearing in the growing market, IDC predicts that only vendors who can handle the complexity of a fragmented market, align themselves to business optimisation as opposed to technology focus and build a dynamic relationship between themselves and the business of the client will succeed.

The report also warns that vendors should learn to be more flexible in the costs of delivery adding, "the ones that survive will be the ones that build up scalable, flexible platforms in their delivery in order to repeat the services and deploy for multiple customers."