Outsourced Infrastructure Management Services

The Economist writes that after the call centre, it is the turn of the IT department to shift to India:

India’s outsourcing boom started with software development and has expanded into a whole range of business services that can be handled a continent away, of which the country’s hundreds of call-centres are just the most prominent examples. This takes that trend one stage further, and shifts offshore much of the administration and maintenance of a firm’s IT systems. Gartner’s Partha Iyengar divides remote IMS work into three categories: monitoring global network operations; providing helpdesk support and maintenance; and administering databases.

It is as yet a small part of India’s IT business. According to NASSCOM, the Indian industry’s lobby, the country’s exports from the software, other IT services and business-process-outsourcing industries grew by more than 25% to $12 billion last year, of which infrastructure services accounted for just over $300m.

But the potential is huge. A report by Deutsche Bank puts the entire size of the global infrastructure-management market at $86 billion. Firms have been outsourcing infrastructure management for years. Arno Franz, of TPI, an outsourcing consultancy, describes it as an industry created in the 1970s and 1980s by EDS, an American giant that came out of efforts by General Motors to automate its car plants. Along with IBM, EDS still dominates the business. Often these firms would actually buy their clients’ computer systems. Or they would have annual maintenance contracts. Either way, their customer had fixed their information-technology costs and were free to concentrate on their core competencies.

Microsoft and China

CFO.com writes:

In the long run, China could pose dangers to Microsoft. If Linux flourishes there, it could spawn formidable low-cost rivals to the American company. “The real value of open source to a country like China,” says Kevin MacIsaac, an analyst with the MetaGroup in Sydney, “is developing a public infrastructure for a software industry. It’s a reasonable and cost-efficient way for China to compete globally.”

Others in Asia see the potential. Japan and South Korea joined China in April on a project to jointly develop a new operating system based on Linux as an alternative to Microsoft’s Windows. Thailand and Malaysia have instigated programs to offer low-cost PCs to citizens with Linux operating systems (see “The Butterfly Effect on Global Pricing?”). They’re being helped along by Microsoft competitors such as Sun Microsystems, which has signed a deal with the Chinese government to supply its Linux desktop operating system and office program to as many as a million PCs there. Future electronics products shipped from Chinasuch as mobile phones and DVD playerscould be developed free from dependence on the Windows operating system.

Interviewed in May, [Microsoft CFO] Connors presents the company’s global future with measured optimism. “We have a good presence in a very small part of the business market today on the desktop,” he says, “and a very small share of the overall budgets, as well as a small share of the consumer market in terms of things that are going to be digitized. And we have a very small share of the market in terms of small- to mid-sized business apps.” He adds: “We think that overall markets will grow at some rate better than world GDP. If we can grow the business better than world GDP, and the business we’re in is growing faster than world GDPthat’s a good place to be.”

It all depends, he says, on what happens to price. “As long as volumes grow and prices remain relatively firm or even soften a bit,” says Connors, “we can have a great business from the revenue perspective, and we can also have a good business from a cash generation or a value generation perspective.”

Put another way, Microsoft is relying on current pricing and a goodly portion of the world’s tech growth to sustain its 31 percent net profit margins. But an increasing portion of global tech growth will come from Asia’s burgeoning economies. And it’s precisely in Asiawith China in the leadthat pressure to alter the uniform pricing structure for its software is the strongest in the world.

“I would like to use your software, but how can I invest in it when I now have cheaper options available?” asked a CFO of a healthcare chain based in Singapore at an executive breakfast where Connors was speaking that morning. The CFO added: “What can I tell my shareholders?”

Connors responded that the total cost of ownership of Microsoft Windows and Office productswhich account for 80 percent of its revenueis in fact less than that of cheaper, open-source software, because Microsoft can offer the entire weight of the ‘eco-system’ that supports its products. This eco-system can be described as the support, customization, integration services, and software that evolve around the Windows product. Connors cited studies that have endorsed this view from Forrester Research and Merrill Lynch.

To-Do Lists

WSJ writes:

For some aficionados, a to-do list is a talisman to ward off the steady creep of forgetfulness. For others, it’s a method to boost self-esteem or reduce clutter. Whatever its purpose, some advice for the uninitiated to avoid getting trampled: Never stand between a hippo and water or a lister and his list.

Oftentimes, list makers scorn the laggards among us whose failed efforts to become listers are symbolized by all the furry balls of illegible paper that get left behind in the washing machine.

In fact, to-do lists often aren’t the key to productivity they’re cracked up to be. Harold Taylor, a time-management consultant in Keswick, Ontario, says lists can become a procrastination tool. “The name of the game becomes getting as many things done as possible as opposed to getting the most important things done,” he says. He claims to know people who add tasks to their to-do lists after they’ve completed them just so they can cross them off. He adds that pocket computers can make things worse. “If you’re disorganized,” he says, “all this technology does is speed up your disorganization.”

Julie Morgenstern, a professional organizer and author of “Making Work Work,” estimates that as many as 30% of listers spend more time managing their lists than completing what’s on them. “It can be a sign of being overwhelmed,” she says. “They are more comfortable in the pause mode than the action mode. It’s safer to be planning than doing.”