Thought Leadership

Reducing TCO through Technology

Reducing TCO through Technology

Jagdish Mahapatra, Vice President, ITS sales, Cisco India & SAARC

The Indian market has evolved over the last couple of years, and organizations today realize the value of technology for reducing costs, streamlining processes and improving efficiencies to remain competitive. Technology is being looked upon, not just as a business enabler but also a trusted partner to achieve the desired business objectives. IT spending has increased across verticals like BFSI, telecom, government, education, healthcare and manufacturing.
The Indian IT sector, pegged at over $70 bn in FY10, is looking at a growth of 4.2% in 2011, according Nascomm's Strategic Review 2010 on the IT-BPO sector in India. The total domestic IT services market is forecasted to increase at a CAGR of 16.7% between 2009 and 2014. This surge in growth is primarily because of the new investments in technology to meet customer's expectations, provide error free output and a lesser turnaround time, while helping organizations scale seamlessly and increase the productivity. Most companies today are looking at a non-linear model to scale, where headcount and revenues are not in tandem.
Organizations are constantly seeking ways to improve their efficiencies and TCO to maximize profit. With teams spread across the globe, facilitating seamless communication and collaboration is a necessity to increase employee productivity. New technologies such as enterprise social software, web, audio, videoconferencing, business video, and telepresence are enabling the employees to work remotely, cutting real estate and energy costs. Services organizations are benefiting from consolidated and centralized infrastructure offerings that bring significant maintenance and management savings.

Adopting Newer Technologies
Enterprises of all sizes are embracing technologies like unified communications (UC), which provide anywhere, anytime, any device access on any platform. A converged IP-based networked communications platform (that is, unified communications) is a growing business priority because UC is helping companies achieve compelling benefits. Companies are realizing 20 to 40% reductions in their annual voice operating costs compared with legacy time-division multiplexing (TDM)-based networks.
To illustrate an example- A major technology company wanted to reduce the escalating operating expenses of its extensive voice communications infrastructure. To reduce TCO, this company put an aggressive plan in place to replace hundreds of traditional PBX systems with less than 15 centralized clusters for IP call control and also migrated most of its employees to the new platform. The company was able to drive a 25 to 30% savings in voice expense by moving to IP communications. In addition to the drop in phone costs, the integrated infrastructure helped to meet the needs of an increasingly mobile workforce and transform the company's voice communications operation into a more strategic, collaborative environment supporting instant messaging, web conferencing and other on-demand capabilities.
In India, verticals like telecom are the early adopters of UC while IT/ITeS, government, defence, healthcare (telemedicine) are gaining traction. The need for collaboration is increasing and users are embracing it to accelerate decision-making, squeeze out productivity gains and strengthen competitive advantage. Business and technology decision-makers are giving importance on providing optimized communication between remotely located knowledge workers and their teams. The near-term priority for most organizations is a shift towards Software-as-a-Service (SaaS), cloud computing, shared services and more selective outsourcing.
Leveraging on technologies like telecommuting and telepresence, server & storage virtualization, businesses have been able to reduce carbon footprint. Next-generation broadband, wireless and new integration technologies have helped organizations to become eco-friendly. ICT is increasingly being viewed as a tool to address business challenges. Adopting a broader network-based approach along with managed services and cloud technologies is enabling upgradability and modularity of products while ensuring that organizations better utilize their staff.
The demand for application platforms, comprehensive virtualized solutions and integrated management offerings is becoming the key focus for adopting cloud computing. Small businesses are looking at clouds as the viable option to back-up their company data, use shared server and applications like CRM, collaborative, messaging applications, interaction with clients, customers and employees at different locations and on the move. One of the major drivers for cloud services in India is reduced capital expenditures. Being scalable, users do not need any kind of expertise or control over the technology infrastructure in the cloud.
The dynamism of today's business environment is forcing organizations to look at an innovative delivery mechanism to generate revenues. New delivery models like pay-as-you-use and SaaS are the growth drivers of managed services. Organizations are increasingly deploying business continuance and disaster recovery (BCDR) services to stay in business, improve availability, avoid outage and, increase customer trust/loyalty. BFSI, telecom, IT/ITeS are the early adopters of BCDR services while verticals like retail, healthcare, manufacturing are also in the race for adoption. Organizations today understand that service oriented architecture (SOA) can help them build a more agile enterprise for the future and reckon that a successful SOA implementation requires the involvement, understanding and consensus of the entire business.

Emerging Trends
The market is moving towards an era of consolidation, all thanks to technologies like collaboration, SOA and virtualization. Concepts like 'Virtual Workplace' gain acceptance, desk phones and computers are being replaced by mobile devices that take on traditional office capabilities. Social networking tools and virtual meetings simulate the feeling of being in-person even as instant messaging and other real-time collaboration tools are becoming the norm, bypassing email.
As the network evolves beyond the traditional role of connectivity, it will enable sophisticated forms of human expression-voice and video-beyond personal computers, to internet telephones, mobile phones, PDAs, iPod, video game consoles, and televisions. Hosted models would be the future and with time, we would see an increasing interest in higher end HD videoconferencing as the prices of HD plunge.
Both enterprises and SMBs will employ UC technologies to achieve cost savings, reduce carbon footprints and enable a greener environment. UC is already changing the way businesses sell to consumers, interact with customers and operate internally. These advances will only become more dramatic, as more organizations deploy an IP-based infrastructure. In fact, IP-technology will help unify organizations of all types, bringing greater productivity, improved efficiencies and deeper, real-time interactions on a worldwide basis.
Large organizations will invest in existing IT infrastructure with major spending in IT services; hardware will undergo a phase of consolidation and more organizations will utilize IT optimization technologies like virtualization and cloud computing to improve RoI and provide quick and easy solutions. By 2012, the cloud will probably become mainstream as core applications move on to it. To meet changing customer expectations, organizations will re-align their strategies to add more value added services. The surge in internet penetration and growing complexity of organizations will fuel the growth of network consulting, and systems integration (SI) services.
With many services companies having expertise in areas like SOA, cloud computing, voice and data convergence, mobile computing, and web 2.0 applications, the market is moving towards technology enabled business transformation services, where service providers address the points of the customers and also provide a long term value addition. Future success will come by providing transformational roadmaps to customers to help them measure and manage, with transparency, the services they procure. The need of the hour is to communicate issues such as convergence, virtualization, and utility computing along with better service levels while balancing the need for cost reduction through innovation.

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