Outsourcing, Increase, Leading, IT

IT is leading the increase in outsourcing

01 Sep 2003 | (Survey)

Information technology is leading the increase in the US outsourcing market, which has more than tripled since 1996, according to a report released by The Conference Board.

The market for outsourcing was US $ 100 billion in 1996 and US $ 345 billion in 2000. The size of the European market is estimated to grow from US $ 40.2 billion in 1998 to US $ 51 billion in 2003, according to the Outsourcing Institute and Dun & Bradstreet. The report is based on a recent survey in which 93% of IT and business executives from 150 American and European companies reported outsourcing some IT and business process functions.

"Outsourcing is no longer a remedy, it is a strategy," says Howard M. Lackow, author of the report. "The most important criteria for choosing a service provider are a proven track record and guaranteed service levels."

Ninety-three percent of those surveyed outsourced some IT and business process functions. The functions most likely to be outsourced are internet services, voice network management, and user support.

Key reasons given for outsourcing are cost savings, improved service, ability to focus on core business, and access to outside expertise.

Overall, survey participants were satisfied with their outsourcing experiences. Not a single respondent reported dissatisfaction with IT strategy and planning, software maintenance, or disaster recovery. More than half reported satisfaction with disaster recovery, as well as with voice network management services. User support, on the other hand, garnered the most dissatisfaction, due to difficulty adapting specific technical functions required by call centres.

More often than not, 63% of the time the company's IT organization initiates the outsourcing effort. The most common reason is to improve function effectiveness. When initiated outside of the IT organization, primarily by senior management, outsourcing is most often undertaken as a result of business conditions, although there are a host of other drivers, including cost savings and the need to focus on core competencies.

Although a relatively high percentage of respondents indicated that they were unsure about their post-outsourcing plans, they did not indicate that they would bring the outsourced function(s) back in-house. The lack of certainty is between re-bidding or continuing with the same vendor. Overall, the outsourcing experience is a positive one, confirmed by the fact that once a function is outsourced, it is unlikely to be brought back in-house.

Source: PR Newswire

For more information on The Conference Board, visit www.conference-board.org

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