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Productivity gains driving IT outsourcing
But cost cutting still top of the agenda for most...

By Nick Heath

Published: Monday 03 March 2008

Businesses are increasingly outsourcing to improve performance - although cutting costs is still the number one reason for most.

Special Report: Inside India

In February 2007 silicon.com's Steve Ranger visited the Indian tech hotspots of Bangalore, Hyderabad, Mumbai and Pune. Click on the links below to see photo galleries of the cities and companies visited.

♦ Satyam's IT campus
♦ Hyderabad's tech parks
♦ Bringing tech to rural India
♦ High-tech on the streets of Pune
♦ Pune - the new Bangalore?
♦ Boom town Bangalore
♦ Bangalore's Electronics City
♦ SAP and Wipro in Bangalore

A Gartner survey of 750 IT and outsourcing executives worldwide found 41 per cent are primarily outsourcing IT to enhance business outcomes - up from 28 per cent in 2005.

The figure is only slightly behind the 47 per cent of organisations that identified controlling costs as their main motivation for IT outsourcing.

Allie Young, VP at Gartner, said the shift towards enhancing business through outsourcing is a sign of a "maturing market".

Buyers of IT outsourcing anticipate increasing its use over the next two years and 88 per cent of the organisations currently outsourcing expect moderate to high levels of outsourcing compared to 67 per cent in 2007.

About 85 per cent of Europe, the Middle East and Africa organisations expect to continue at the same level or increase their outsourcing during the next two years, up from 62 per cent in 2007.