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Gartner Says Outsourcing Will Continue to Be the Main Driver for Growth in IT Services

    Online News published in DMReview.com
May 21, 2004

Outsourcing continues to be the main source of growth in IT services, and has become a mainstream business practice for companies of all sizes. According to Gartner, Inc., in 2004, outsourcing will account for 53 percent of the total worldwide IT services market, and will make up 56 percent of the market by 2007.

"Outsourcing is becoming the dominant way that enterprises buy IT services," said Allie Young, research vice president for Gartner's sourcing group. "The outsourcing industry continues to evolve, but the imperatives for enterprises that are considering outsourcing are constant - focus on core business, access to critical technical expertise and optimized IT operations."

There is heightened attention on business processes, as business process outsourcing (BPO) becomes the new growth area for adding greater value to outsourcing. Highly complex, multiyear IT projects are still found in megadeals, but for the average enterprise, the rise of shorter-term "selective" outsourcing will give way to a "best of breed" approach as business units influence outsourcing choices to a greater degree. The need for best in class IT outsourcing (ITO) and BPO for business impact is driving this shift.

The IT services market is also in the middle of unprecedented change as companies rush to employ a global delivery model (GDM), primarily in an attempt to reduce costs. Many enterprises consider "offshore" as synonymous with cost savings. The industry is transitioning to "global sourcing", which involves a broader, more varied value proposition, a more fundamental change in how enterprises buy and source IT services, and how outsourcers create and deliver IT-enabled business services.

"A global delivery model means that enterprises can use IT resources from anywhere in the world to ensure that they have the right skills at the right price at the right time, with managed risk," Young said. "Only the largest global corporations will rely on captive centers to bring a global labor pool to their IS organizations; most enterprises will do so via outsourcing, tapping into the GDM of an outsourcer."

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