Both small and large providers will be affected, but the biggest impact will initially be felt with the largest vendors.
Over the last two or three years, there has been a move by customers to bundling all of their IT services together for one holistic view of the infrastructure. The cloud has been a major enabler in this new trend, and this will continue to become an industry norm, Watave said.
IT outsourcing service providers are taking more of a global delivery model approach. Providers no longer have to provide infrastructure support if they offer cloud services, so they can offer their services on a much wider geographical basis from their home base.
Providers are building applications on top of their cloud services and selling them on an outcome-based model. This trend is going to continue.
CIOs in enterprises aren’t yet ready to climb on board the cloud bandwagon with their business applications, but they are looking to the cloud for back-office and infrastructure applications like messaging, collaboration, document management, content management, etc. IT outsourcing providers are being tapped to provide such applications to enterprises.
Two years ago, the outsourcing market was mostly into messaging and managing Exchange, Lotus Notes and building applications on top of them. There’s a shift going on now towards providing collaboration tools as a service.
Traditional offshoring players with low-cost labor are finding their space being eaten away by large IT vendors.
Customers are trying to minimize customization of applications in favour of focusing on increasing productivity. According to Watave, this is a major shift in customer buying patterns that will continue.
Customers no longer want to give a minimum commitment, but instead demand pricing models based on monthly usage, which Watave said is a significant shift from the way things have been done. Since customers are changing their buying patterns, the typical IT outsourcing pricing model is shifting to meet their new needs. Long-term contracts are being pushed aside by usage-based pricing models.