
Smaller deals favoured
By Nick Heath
Published: 10 January 2008 12:13 GMT
Global outsourcing is predicted to grow by 8.1 per cent this year as companies turn towards smaller contracts.
Analyst house Gartner forecasts healthy growth rates worldwide in the IT outsourcing (ITO) and business process outsourcing (BPO) markets.
More companies are favouring smaller deals and splitting services between several providers and countries, the Gartner report found.
This shift away from large high-value deals is partly responsible for the fact that publicly reported BPO and ITO contract values fell by 50 per cent in 2007.
But organisations are also still failing in their IT sourcing strategies and governance structures when drawing up outsourcing agreements, Gartner said.
Kurt Potter, research director at Gartner, said in a statement: "Because these organisations lack the basic building blocks for successful vendor management and outsourcing success, expected cost savings and other benefits are difficult to obtain."
Spending on offshore services is three times higher in North America than in Western Europe but the gap is closing, with Indian providers becoming more popular in 2007, growing 40 per cent in the US and 60 per cent in Europe.
Research VP at Gartner, Ian Marriott, said other countries will continue to emerge as challengers to India, and added that strong demand is putting a strain on the Indian labour force, with staff attrition and cost increases remaining high.
There is an increasing move towards lower-cost, offshore delivery centres but companies with a history of outsourcing services are also seeking providers that better support business needs.
Software as a service (SaaS) is emerging as a viable alternative to traditional outsourcing for user organisations, with vendors including Amazon, Google, Microsoft and SAP making announcements about new SaaS offerings and mass-customised software platforms, Gartner said.
Manage the expectations of the various customers with respect to services provided by BSS SC Identify need for services changes or agreement ...
Responsibilities and Impact: The UK Delivery Centre (UKDC) is an integral part of Accenture's Global Delivery Network, which includes facilities ...
Deals can either be outsourcing or outtasking deals. This will involve identifying, shaping and helping to close large deals. A key part of this role ...
CIO Agenda 2008
The exclusive silicon.com CIO Agenda 2008 survey looks at the CIO's tech shopping list for the year, examines whether IT budgets are rising or falling and reveals what the pain points are for tech chiefs this year. Find out more in our latest special report.
Stories from the web...
Copyright ©1995-2008 CNET Networks, Inc. All rights reserved. Top of page
silicon.com Dear silicon.com... outsource vs insource, Naked CIO on open source, password overload… Reader Comments of the Week
silicon.com Dear silicon.com... iPlayer vs ISPs, rip off outsourcing, social networking… Reader Comments of the Week