Wednesday, January 09, 2008

Outsourcing Market Will Remain Robust in 2008


IT outsourcing deals don't garner the splashy headlines they did just two or three years ago, but that doesn't mean enterprise customers are suddenly averse to turning to outside providers for help with their most important technology projects.

In fact, according to Gartner, worldwide outsourcing spending will grow about 8.1 percent this year to $441 billion, up from $408 billion in 2007.

But rather than locking themselves into multi-year contracts with one vendor like IBM, Accenture or EDS, more and more CIOs are taking a buffet approach, signing several smaller-sized deals with multiple providers that can deliver specialized products and services that address specific business objectives.

The emergence of the software-as-a-service model (SaaS) (define) is also playing a pivotal role in changing the way companies evaluate their sourcing needs, giving companies a viable alternative to traditional outsourcing providers and forcing these same vendors to either partner with or develop their own on-demand delivery model.

"SaaS is still in its infancy but it's fast becoming a viable option for a portfolio of services and software people are using," Kurt Potter, an analyst at Gartner, said in an interview with "We're finding that many companies are looking to SaaS options to minimize the customization that traditional outsourcing vendors and projects typically require. They're testing and adopting it in areas that don't conflict with other core architecture areas."