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It was only last year that Dataquest forecasted the evolution of the tier-2 system integrators and solution providers in a much stronger avatar. True to that prediction, the top solution provider in India, Allied Digital, would feature among the top ten domestic IT services players. In fact, only eight companies earned more in services revenues than Allied Digital.

What is more interesting is the fact that most of these solution providers delved into avenues that demand more market maturity and technical expertise, woven seamlessly with an integrated service structure t o deliver efficient business solutions for their clients. They not only restricted themselves to SMBs, but increasingly started addressing a larger clientle as well.

If FY 08 completed the transformation of the erstwhile box pushers into solution providers, FY 09 marked the coming of age of the latter as they matured to develop services as a well-chartered business strategy.

The Evolution
The evolution of the tier-2 solution providers and their upgradation towards the next level of client servicing is surely to change the way IT domestic services in India have been addressed.

Doing hardware business and doing solutions business are completely different ballgames. Understanding the criticality of providing solutions and services on BI or any business application for that matter, the tier-2 players have not only developed the required skill sets to deliver such projects but have built well-crafted business blocks around them. And the last two years witnessed this thriving business-line slowly picking up. Now the market is far more ripe and so are the players who are gaining better hold of the ground and are maturing in terms of providing effective business solutions to their customers.

However, in order to gain momentum in the new model, companies like Allied Digital, Frontier Business System, Accel Frontline and Team Computers had to undergo rigorous process re-engineering as well as introduce many new aspects into their businesses. Operation and management of business processes became very vital as unlike hardware business, project management is crucial here.

CyberMedia Research                                                                                                        DQ Estimates

FY 09 marked the year of maturity for solution providers. Moving beyond smaller projects, primarily based on their reselling legacy, most of these tier-2 players embarked on a much larger mission. The nature of deals proved their ability to handle multiple clients across multiple verticals and even in other geographies

One common observation associated with all these companies is that none of them parted with their old legacy of hardware reselling business, rather they aligned solution business surrounding their core strength area in a manner to obtain maximum profit out of the marriage of the two businesses. Apart from giving additional revenue, reselling business helps in the current solutions business by providing a wholesome hardware and software solution to the customers.

Key Trends
With time the scalability and nature of projects delivered by the solution providers have changed drastically. They have started taking up and delivering large-scale and more complex projects for their customers. Solutions based on BI applications have been on high demand last year. Delhi based Team Computers did some good business on areas like building dashboards and analytics, among others. Another active space has been ERP and CRM implementation.

Chennai based Accel Frontline bagged a Rs 8.5 crore order for application and server consolidation from Axis Bank. Precision Infomatic added fresh clients from new verticals like government, PSUs and defense wherein they deployed several IT integration and virtualization projects.

Data center solutions have been a big area along with remote services. Bengaluru based Frontier Business Systems invested $4 mn in setting up its new green office and green data center. The company also focused on its IT services business along with security consulting, RIM and virtualization.

Ahmedabad based SAI Infotech extended relationship with BSNL, and jointly delivered several projects for various government departments and PSUs. It has delivered projects on system integration, telecom network management, MIS, VoIP and IVRS, and video telephony solutions among others.

CyberMedia Research                                                                                                     DQ Estimates

Consolidation of business was a prime concern for solution providers last year, as many of them focused on acquisitions and collaborations

Going Global
Another trend that is now synonymous with the solution providing business is going overseas. To start with, Sai has launched its operations in the UAE, and in collaboration with local partners has carried out a few good projects.

Team had good business coming from the US as it expanded its operations. Progressive expanded its geographical footprint not only in India but in the UAE and Singapore which enabled it to offer services to the MENA and ASEAN markets.

Allied Digital, on the other hand, acquired US based En Pointe Technologies to give a boost to its services business. The move helped Allied churn out Rs 200 crore business from the US geography. After Belgium and the UK, Mumbai based Omnitech InfoSolutions expanded operations in the Netherlands and Germany as part of its Europe strategy.

As the delivery portfolio and efficiency enhances, so do expectations and competition. To sustain and thrive in this business, it is very important to follow the current market trends and upgrade skills on latest technologies and develop solutions around them. Services is an area wherein one has to provide end-to-end solutions to his clients. Therefore, continuous evolution is essential and its now up to these solution providers to see how fast they can shape their way to join the big league.

Piyali Guha
piyalig@cybermedia.co.in

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