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Cognizant will aim to strike a balancebetween ASP and customised modes 

Anand Krishnamoorthy  
Chennai : Indian software service companies will have to face the challenges emerging from software applications moving to the application service provider (ASP) mode. "With corporates using standardised software through ASPs, the need for customised applications will reduce considerably", said Mr N Lakshmi Narayanan, president and chief operating officer of the Nasdaq-listed Cognizant Technology Solutions.

Cognizant has hedged its risks by ASP-enabling its offering while continuing to offer customised software solutions to its customers. Indian software service companies have to offer their solutions on the ASP mode or be present only in niches where high amount of customisation is involved, feels Mr Narayanan.

The ASP segment is considered a white hot space in the technology sector. Industry research outfits had pegged the value of this market ranging from a conservative $35 billion to an ambitious $1 billion. But the ASP market has not taken off as expected even in technology capital - the US.

Among the reasons cited for the not-so-fast progress in the ASP space is the issue of security of client data with ASPs, network security and the customisation wanted by corporates in certain niches. The ASP market holds a huge potential for Indian software firms. ASP applications can be hosted out of India, provided the bandwidth requirement for this can be met. Typically, ASP applications require upgrades to be done on a frequent basis without disturbing existing users. Among other things, the technical support services for ASP clients could be provided out of India, adds Mr Narayanan.

Cognizant is also undertaking ASP projects in the Indian market. It is working with two Indian firms for developing ASP-based solution in verticals such as financial services.

The domestic market for ASP-based services is expected to rapidly develop in the near future. While the bandwidth between major cities is expected to be available in adequate quantity in the near future, ASP services can operate with ease. ASP offers clients scalability and ease-of-use which traditional client server models find difficult to match. The initial payment required for the ASP application is generally a fraction of the cost of purchase of the application. Monthly rentals or structured payment as negotiated would have to be paid by the user.

The switching cost from one application to another would be high - depending on how critical is the application to the user.

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