IT Outsourcing To Do Poorly In Comparison To Other Sectors- Forrester Research
June 5, 2010
According to Forrester Research, IT outsourcing, consulting and deployment are bound to decrease in the wake of the recession, though the industry has been growing steadily like other industries.
IT outsourcing is what makes up the mainstay of the Indian export industry and according to 2010 statistics on outsourcing in India, industry giants like Wipro, Infosys and TCS have had to compete with new models of outsourcing like onshore and nearshore options. It also means software development firms, web design firms and web development companies will have to expand into the European market to get more clients as North America is experiencing a recoiling effect from the recession.
It turns out that the slowdown in growth in the IT outsourcing industry is not just because of a rebound from the downturn in the economy that roiled financial markets in 2008, but the mega deals that have taken place have not had much of an impact on the industry either.
In the next two years, the complete IT outsourcing function of a U.S. firm is likely to grow as much as 6 percent. Software, however, will add by as much as 11 percent this year and in 2011. Software outsourcing accounts for about 35 percent of outsourcing and is the highest function outsourced by U.S. firms.
The outlook is starkly different from that of the recession, when companies were trimming down costs and yet sending off projects to their outsoucers in hopes of cost savings in the long term. Incidentally, IT spending in 2009 was down by a whopping 8 percent due to the effect of the recession.
Although outsourcing in general is on the rise, outsourcing giants like Infosys and Wipro have not reported mega deals, since the recession began. This trend is likely to stay for a while, say anlysts.
Andrew Bartels, principal analyst at Forrester, a US-based market intelligence firm. “There is a sense of disenchantment with large-scale IT outsourcing. Companies have realized that whole-scale IT outsourcing leaves you much more exposed. They are likely to go for more granular deals in the future, “ globalservicemedia.com reported. He added, “More companies will start to drop out. Rather than starting with outsourcing, they will look at ownership… cost becomes much less important. Outsourcing will do poorly compared to the other sectors.”
Apparently, a recovery in the offing is not expected to change things around.
Comments
One Response to “IT Outsourcing To Do Poorly In Comparison To Other Sectors- Forrester Research”
Got something to say?
-
Advertisements
Text Links
[...] This post was mentioned on Twitter by OutsourcePortfolio, Juan Carlos Sánchez. Juan Carlos Sánchez said: RT @OutsourceBlog: IT Outsourcing To Do Poorly In Comparison To Other Sectors- Forrester Research http://tinyurl.com/24rbzkz [...]