IT Outsourcing Landscape Continues to Shift

 
 
By Nathan Eddy  |  Posted 2014-09-29 Email
 
 
 
 
 
 
 
 
 
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    1 - Application Hosting: Most Outsourced Function
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    Application Hosting: Most Outsourced Function

    Large organizations are spending a median 7.4% of their IT budget on outsourcing, compared with 6.1% for small organizations and 4.6% for midsize organizations. Application hosting was the fastest-growing type of outsourcing, thanks to the growing adoption of software as a service (SaaS).
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    2 - IT Sector Outsourcing Best in Help, Desktop Support
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    IT Sector Outsourcing Best in Help, Desktop Support

    In the IT sector, the greatest potential for successfully reducing costs are through help desk and desktop support outsourcing. Disaster recovery and Web and e-commerce operations led the list for functions with the greatest potential for improving service through outsourcing.
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    3 - Outsourcing Most Prevalent Among Larger Firms
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    Outsourcing Most Prevalent Among Larger Firms

    Larger organizations do the most outsourcing as they are driven by greater budgets and needs, but nothing is keeping smaller organizations from doing the same. In fact, companies of all customer sizes may embrace the outsourcing of cloud services for applications and infrastructure.
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    4 - SMBs Apt to Outsource App Development
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    SMBs Apt to Outsource App Development

    60% of small and midsize organizations and 62% of large organizations outsource at least a portion of their application development work, while 78% of organizations report the same or better service with outsourcing application development.
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    5 - Outsourcing Not Always the Answer
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    Outsourcing Not Always the Answer

    Organizations can save money by outsourcing their help desk, but this move may not be worthwhile when it leads to user dissatisfaction. As more organizations turn to IT service management, the help desk becomes the main way the IT organization connects with users.
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    6 - Outsourcing Percentages Depend on Vertical
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    Outsourcing Percentages Depend on Vertical

    The market sector can influence an organization's outsourcing habits. Just consider that 71% of financial services companies outsource some application development, while 67% of retail and wholesale distribution companies outsource theirs.
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    7 - A Look at Outsourcing by Organization Type
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    A Look at Outsourcing by Organization Type

    Organizations outsource to varying degrees. This outsourcing includes high-tech organizations, at 65%; public/nonprofit organizations, at 64%; manufacturers, at 63%; and professional and technical services, at 47%.
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    8 - App Development Outsourcing Adds Costs
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    App Development Outsourcing Adds Costs

    Compared with performing the same work in-house, outsourcing application development costs more for 53% of respondents, about the same for 24% and less for 23% of outsourcing customers.
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    9 - Outsourcing App Development Not Reaping Returns
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    Outsourcing App Development Not Reaping Returns

    Organizations often outsource application development for reasons other than cost and service experience. This function ranks last in the Computer Economics' survey and suggests a great deal of dissatisfaction exists with service providers.
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    10 - IT Operating Budgets See Modest Growth
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    IT Operating Budgets See Modest Growth

    Companies in the middle of the pack are reporting the strongest growth in IT operating budgets, at about 3.6%, perhaps as they try to catch up with their larger counterparts, while smaller organizations still lag somewhat behind.
 

Many IT functions, from help desk to data center operations, have a long history of outsourcing, but a recent survey from Computer Economics suggests that, before taking that plunge, organizations should take a good look at the specific needs of their business, including their outsourcing. While the data does not provide estimates of the total amount of money being spent on outsourcing, the study does show that the number of organizations outsourcing certain functions is in decline, at least over the short term. Computer Economics profiles outsourcing activity for 11 IT functions, ranging from application development to IT security and network operations, and shows that IT organizations are putting new resources into internal operations at a pace that is greater than their spending with IT service providers. In essence, IT outsourcing budgets are not necessarily shrinking so much as IT budgets are rising—or, in other words, the denominator is rising faster than the numerator. Here are key takeaways from the study.

 
 
 
 
 
 
 
 
 
 
 
 

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