Management consultancy McKinsey & Company expects a “rapid growth” in offshored IT infrastructure management, drawing from a recent poll of more than 140 multinational corporations. Unlike offshore application development and business process outsourcing, the market for remote IT management and maintenance is “languishing,” with only seven percent of the $94 to $104 billion market being served, according to a McKinsey Quarterly report issued this month, authored by two McKinsey executives based in Mumbai.
Many foreign outsourcing firms with a major financial services business, including Wipro and Infosys, have focused many of their burgeoning efforts in IT management to compete with homespun system integrators like EDS. According to McKinsey, industry revenues for remote infrastructure management (RIM) outsourcers have grown 80 percent since 2005 to reach $6 to $7 billion per annum. That market could grow to $26 to $28 billion within five years. McKinsey notes that RIM can save Fortune 50-level companies as much as $500 million in IT management budgets, mostly from labor savings.
Of course, there’s a caveat of particular concern to the financial industry, which has traditionally been wary of handing over such controls to overseas operations: “Disruptions in core IT systems during the transition or ongoing operations have real financial and security costs, including possible data loss and the interruption of operations,” the report states. “Other concerns include regulatory problems, such as the possibility of giving third parties inadvertent access to confidential medical records, and of financial fraud or intellectual-property (IP) theft when vendors gain full access to corporate systems.”