IT outsourcers to benefit from upturn, says Gartner
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Economic recovery will encourage increase in spending on external IT services, according to analyst survey
Spending on outsourced IT services will grow as the economy recovers, research by industry analyst Gartner has predicted.
Gartner's survey of more than 1,000 private sector organisations showed that 85% anticipate their spending on external IT service providers (ESPs) will either increase or stay the same as the economic situation improves.
However, the researcher advised that those who outsource will remain cautious regarding their IT spend, which could have repercussions for ESPs.
"In terms of IT services spending, the recession has been clearly felt by organisations, which report the following changes in their behaviors: increased contract renegotiations with ESPs, greater influence of the CFO and procurement in IT services spending, and increased levels of offshore services usage," explained Allie Young, vice president of Gartner. "However, the good news for service providers going forward is that the majority of buyers of IT and business process services will increasingly turn to ESPs to support the execution of their IT strategies."
But Young also warned that the IT services market will remain "hypercompetitive", and that external providers must focus on cost-effectiveness and demonstrate agility in reacting to market changes if they are to succeed in a post-recession environment.
At Information Age's Managing IT Cost Effectively seminar in February, Stephen Bullas, managing partner at the European Centre for Offshore Development, argued that benefits such as cost reduction and increased productivity would ensure that IT outsourcing would retain its appeal with organisations, regardless of the economic climate. Overall though, Bullas explained that cost-cutting will remain the primary driver for outsourcing.
