Google apps is good but customer wants an on-premise solution.
IMO, he will also need an on premise sys admin, if this email server is facing the Internet.
Exactly. Why bother going around setting up things on your own when you are getting it for free. Not only you'll save on sysadmin overhead as Arun said, but also infrastructure cost and time.
Having said that, you may have your constraint and customer specifications to work with. You could at the least suggest this to them and then make a choice on technology. I have a related article on this at http://www.initcron.org/cloud-computing/googledomains
Thanks GS