Outsourcing deals smaller, but more of them around
Outsourcing deals smaller, but more of them around
Outsourcing is undergoing something of a sea change, with a marked shift away from lengthy multi-year, multi-million dollar agreements, replaced by smaller agreements focused on certain aspects of the client's business. Organisations are also increasingly choosing to outsource application management.
That is according to separate reports published by analyst groups Gartner and Meta.
As a result of the trend towards outsourcing small components of a business' service requirements, smaller outsourcing vendors are expected to reap the benefits, unable as they were to compete for the full service deals.
"Smaller vendors, especially, will have new opportunities to compete in specialised niches," said Gartner analyst Linda Cohen.
"The question is not whether or not to outsource, but rather which elements of the IT portfolio are most suited to an outsourcing engagement," said Kip Martin, Vice President with Meta's Technology Research Services. "Although the benefits of outsourcing are well established, determining the applicability of outsourcing to applications is more challenging - and the benefits potentially more elusive."
Gartner's Cohen added that the changes in the outsourcing landscape will mean that larger vendors will need to try harder on differentiating their business value.
"Many first time outsourcers will look at outsourcing a set of applications first, and then move to outsourcing more processes. Once enterprises outsource, few of them take operations back in-house. Satisfactory outsourcing relationships encourage enterprises to analyse the longer term benefits of outsourcing. This often leads them to purchase these benefits in other operations."
Meanwhile, Meta found that organisations are investing considerable financial and human resources in the development and maintenance of applications across the IT portfolio.
The application portfolio is becoming more complex as the proliferation of web services drives exponential growth of interapplication integrations and as the number of enterprise applications increases due to applications migrating from being experimental to becoming core to strategic business processes.
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