Saturday, May 31, 2008

Better services deals in the offing

Source : Click

Delegates at the Gartner Outsourcing and IT Services Summit taking place in London next week will be told to expect more for less when it comes to negotiating outsourcing deals.

Speaking ahead of the event, Gartner research vice president Claudio Da Rold said that business leaders could take advantage of turbulence in the outsourcing market to wring better deals out of suppliers.

He added that clients are already becoming more outcome driven when negotiating contracts, and the global economic slowdown, coupled with rising energy prices, was driving IT chiefs to demand higher-value outsourcing deals for lower costs.

A new Gartner survey of 316 European professionals involved in outsourcing found that 65 per cent of respondents believe managing the performance of their service providers is their most critical management issue. It also revealed that 44 per cent of respondents were considering changing outsourcing providers indicating the pressure that suppliers will be under.

Cost cutting remains the primary driver for outsourcing for 53 per cent of respondents. This focus is also persuading businesses to explore alternative delivery models, including software as a service and cloud computing, said Da Rold.

He cited the example of hosted email services as indicative of the change under way in outsourcing. While the average price for a corporate hosted email account on [Microsoft] Exchange is about £3, Google charges only £2, and other firms are investing heavily to find a way to deliver email for only £1, said Da Rold.

Business leaders are becoming less concerned about getting customised services if they can get generic alternatives delivered at much-reduced rates, he added.