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Outsourcing Flattens as IT Economy Levels Out

When hard times hit, IT organizations looking to cut costs and make expenses more predictable shifted more of the heavy lifting to outsourcing firms, yet once the economy started to stabilize that trend started to even out. That, at least, is one of the main takeaways from a new study by research firm Computer Economics. […]

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SJJ

Stuart J. Johnston

Oct 3, 2011

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When hard times hit, IT organizations looking to cut costs and make expenses more predictable shifted more of the heavy lifting to outsourcing firms, yet once the economy started to stabilize that trend started to even out.

That, at least, is one of the main takeaways from a new study by research firm Computer Economics.

In a new report entitled, “IT Outsourcing Statistics 2011/2012,” the researcher found that, during the recession and its early stages of recovery, outsourcing was on the rise, but lately, not so much.

“Among organizations that outsource IT work, the percentage of their total IT spending going to service providers rose from 6.1 percent in 2009 to 7.1 percent in 2010 and then leveled out [at 7.1 percent], showing no year-over-year growth in 2011,” the report said.

Further, the current outlook for outsourcing shows no signs of picking up speed anytime soon.

“While a robust recovery might prompt organizations to seek outside help, at least on a temporary basis, the recovery in IT spending is not yet strong enough to accelerate spending on outsourcing services,” the report added.

Additionally, the market for IT services isn’t weak enough to prompt more aggressive outsourcing at present either.

“In short, IT executives are maintaining the status quo, awaiting evidence that the tenuous economic recovery will progress before engaging in more strategic outsourcing initiatives,” Computer Economics’ study said.

One area that is showing some strength within outsourcing categories is software-as-a-service (SaaS).

In fact, a Gartner study released last week suggests that SaaS areas such as email provided in the cloud are ripe for adoption by cash strapped IT staffs looking at outsourcing less strategic functions.

Computer Economics’ report appears to backup that assumption.

“While the amount of the typical portfolio being hosted by outside parties remains low, application hosting is the most frequently outsourced service in the study,” the report said.

Among applications areas providing the best opportunities for outsourcing, according to Computer Economics, are web/e-commerce systems, application development, and application maintenance.

Stuart J. Johnston is a contributing editor at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.