10 outsourcing trends continue from www.outsourcing.com:
7. The Mega-Death of Mega-Deals. Increased near-term cost pressures will drive a continued decline in mega-deals in 2010, Everest predicts. Customers will continue to eschew the billion-plus deals for more flexible approaches to outsourcing, says Lee Ayling, manager of Equaterra's U.K.-based IT advisory.
"In 2010, we will see many contracts focused on core processes with shorter, less expensive transition periods and reduced return on investment timescales," says Brad Everett, executive director of EquaTerra's human resource practice.
8. The Public Interest. All signs point to increased outsourcing in local and state government. "Budgets are tight, but demands for new technologies are strong," explains Glenn Davidson, head of EquaTerra's public sector practice. "The winners in the competition will be offering innovative financing and strong risk insurance."
However, he predicts decreased outsourcing in D.C. "The federal government, with its ability to print money and this administration's push for insourcing, is likely to continue its investment in internal solutions," Davidson says.
9. The (Slow) Return of the Discretionary Spend. Providers of application development, and maintenance and consulting services will develop innovative contract and pricing structures to win customers as the market rebounds next year, according to Everest. Both types of deals took a hit as buyers put discretionary spending on hold.
But such projects will make a gradual recovery in 2010, predicts Everest, noting that "the pace of this change will be dictated entirely by the improvement in the global business environment."
10. Semi-Sourcing. Cloud computing and software-as-a-service—which EquaTerra's Stan Lepeak calls "semi-outsourcing alternatives"—will make waves in the IT services industry in the year ahead.
The IT outsourcing market has reached a major tipping point, according to Forrester Research analysts, and a focus on outcomes means that traditional deals will continue to decrease during the next several years as new utility and cloud service offerings proliferate. "This will be a large focus as companies try to figure out how this will work," agrees Dave Brown, head of EquaTerra's financial architecture practice. "Those that develop a sustainable commercial offering will hit the headlines early and often."
Modularity will be the name of the game. Suppliers are poised to offer buyers more and more plug-and-play services coupled with pay-as-you-go pricing. "We have observed a continuing move toward a more scalable and virtual infrastructure for many services...and more aggressive efforts to take advantage of sourcing's ability to scale up or down with the size of the business," says Melany Williams, partner and managing director of service provider consultancy TPI Momentum.
But it will be small and midsize companies leading the charge in this space in 2010, says Everest, while large enterprises wait for more of the technical and business challenges to be resolved before adopting these new delivery models.
© 2010 CXO Media Inc.
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