Outsourcing, IT, Offshoring
Outsourcing and offshoring on the rise
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Outsourcing continues to be the main source of growth in IT services and will account for over half of the worldwide market by the end of 2004.
That is according to research firm Gartner, which claimed that the subcontracting of selected services to an outside company will grow from 53 percent of the total worldwide IT services market to 56 percent by 2007, said Stamford, Connecticut-based Gartner. Moreover, IT outsourcing has become a mainstream business practice for companies of all sizes, according to new research presented by the firm in Las Vegas at the Outsourcing Summit 2004.The technology research company also said that business process outsourcing (BPO) has become the new growth area for adding greater value to outsourcing.
Emerging global delivery models mean that enterprises can use IT resources from anywhere in the world to ensure that they have the right skills at the right price at the right time, with managed risk, said Allie Young, research vice president for Gartner's sourcing group. Despite continued evolution in the outsourcing industry, imperatives such as focussing on core business, access to critical technical expertise and optimised IT operations remain the same, he added.
Meanwhile, a second outsourcing-related report has predicted that there will be a 40 percent increase in the amount of services jobs moving out of the United States. Technology research company Forrester has said that the number of jobs moving offshore from the US by the end of 2005 will grow to 830,000 compared with its original projection of 588,000.
While 5 percent of the Fortune 1,000 firms are "full exploiters" of offshoring and use it whenever possible, firms that have experimented with small projects will become more committed and such deals will account for most of the growth, added Forrester at the GigaWorld IT Forum.
Publicised savings and pressure from senior management to define an offshore strategy has caused chief information officers (CIO) to consider offshoring as a viable option, said Forrester.
A second factor driving the increase identified in the research by the Cambridge, Massachusetts firm includes increased spending while processes are put in place to manage the remote IT and business operations. Leading Indian suppliers, such as Satyam, Wipro and Infosys, are also expanding their services beyond application maintenance into business process outsourcing (BPO) and remote monitoring and administration of infrastructure. This is allowing them to capture a greater percentage of IT services' spend, said Forrester.
In addition, the research also identifies a broadening of the types of jobs outsourced externally from the US and lists new outsourcing locations, including China, Vietnam and North Africa.
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