More IT Outsourcers Prioritize Skills Over Savings
An article in Yahoo! News alerts us to a package of stories about to grace the pages of Informationweek Magazine. The stories were written based on the results of "Analyzing the Outsourcers", a survey of over 300 business-technology pros who've assessed the performance of the top dozen IT outsourcing firms.
More than 1/3 of the professionals surveyed say their companies will spend $5 million a year or more on IT outsourcing. Also, "more than one of four respondents say they have outsourced at least one business process to a third party."
Yahoo! News elaborates:
In response to the demand, many classic IT outsourcing vendors are boosting their business-process outsourcing offerings--but with a twist. To compete with pure-play business-process outsourcers such as payroll processor Automatic Data Processing Inc. or HR outsourcing company Hewitt Associates, IT outsourcers meld IT outsourcing and BPO. That is, they will provide customers with the infrastructure and the business applications and will staff the business-process function. EDS, for instance, is building a platform of hardware, middleware, and business applications called agile infrastructure, on top of which it wants to provide business services such as HR management.
[...]
Such moves indicate that IT vendors are building out their day-to-day operational capabilities in an effort to play in the fast-growing BPO market, says Forrester Research analyst John McCarthy. IBM used to subcontract much of the lower-level call-center work in its customer engagements but now seeks to capture that revenue, he says. There is significant revenue to be had. According to Gartner, the worldwide BPO market will grow 8% in 2004 to $131 billion.
This growing confidence in IT outsourcing is certainly noteworthy. But another remarkable result of the survey is that most of the interviewed professionals no longer think cost is the prime motivator for IT outsourcing. They would outsource, they say, mainly because of "operational expertise."
A similar study conducted by InformationWeek in 2002 revealed that two-thirds of the respondents had considered lower cost to be the main reason for outsourcing. Only one-third of this year's respondents retain that view.
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