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Story URL: http://services.silicon.com/itoutsourcing/0,3800004871,39157270,00.htm

Short-term cost-cutting still key outsourcing driver
But that's a dangerous route to go down, warns Gartner...

By Andy McCue

Published: Thursday 16 March 2006

Short-term cost gains are still the main driver for outsourcing IT, according to new research from analyst Gartner.

Reducing costs and improving efficiencies were cited as the main reasons for outsourcing by more than half of the 945 respondents to the global survey.

The other main outsourcing drivers after cost cutting include achieving speed and flexibility, and gaining access to technical expertise and skills.

But the reasons for outsourcing also differed by vertical market and geography. Financial services and public sector organisations are the most likely to go down the cost-cutting route while US respondents cited improving IT service to end users as their leading driver.

The top two inhibitors to IT outsourcing are data security or privacy issues, and concerns around the potentially high costs of outsourcing.

Allie Young, research VP at Gartner, said in a statement: "Companies have a growing concern about losing control of their intellectual capital and the business knowledge of key employees whose jobs or roles may be threatened by outsourcing, particularly when downsizing occurs."