Tata Consultancy Services (TCS), India's largest outsourcer, is targeting small and medium-size businesses with a combination of hardware, networking, and office and business software on a pay-per-use model.
The company is targeting the Indian market first with the offering called "IT-as-a-service", and hopes to get 1,000 customers in the first year, said N. Chandrasekaran, TCS CEO and managing director, in a conference call on Tuesday.
TCS also plans to target other emerging markets with this offering which makes extensive use of a multi-tenanted cloud computing model to keep costs low for customers, Chandrasekaran said.
Indian outsourcers have typically offered services on a time and materials basis, where the pricing of the service is based on the number of people deployed and the duration.
Some of them are, however, trying to also offer value-added offerings to boost their margins. Competitor Infosys Technologies, for example, is offering a platform for delivery of mobile applications, called Flypp, which it is marketing to mobile operators wanting to set up their own branded app stores.
TCS expects about US$1 billion in revenue over five years from the new IT-as-a-service business.
The offering includes business analytics software and enterprise resource planning (ERP) software targeted at five vertical markets that has been largely developed in-house by TCS, with the use of some open-source components as well, according to Chandrasekaran.
The company did not disclose the pricing for the service, which has been already deployed by about 100 customers in a pilot phase lasted a year.
About 95 per cent of Indian firms are SMBs, and 60 per cent of these do not have information and communications technology, said V. Ramaswamy, global head for SMBs at TCS.
A pay-per-use model is more attractive to SMBs as they would rather focus their capital expenditure on investments in their core business rather than on IT, Ramaswamy added.
To cut its own capital expenditure in the new business, TCS has tied up with partners who will provide the network infrastructure, hardware and the datacenters, Chandrasekaran said.
A number of companies are looking at opportunities in the cloud computing market in India. Tata Communications, another Tata Group company, is for example offering a cloud-based computing infrastructure service to customers, which takes advantage of its investment in global communications infrastructure, managed services, and data centers.