Outsourcing sizes up smaller deals

Discussion in 'VOIP' started by Knowing About, Oct 13, 2006.

  1. Dramatic changes in IT outsourcing, primarily caused by more demanding
    customers, will place increasing pressure on outsourcing providers to
    adapt to the more competitive landscape, according to an IDC report
    issued on Thursday.

    The report on the top 100 worldwide outsourcing deals of 2005 describes
    an industry sector, which saw a slight 3 percent decrease in deals from
    US$70.1 billion in 2004 to US$67.9 billion in 2005. While the number of
    big deals between US$500 million and US$1 billion is declining, smaller
    contracts of less than US$250 million are rising dramatically.

    "It's clear that they (vendors) must change and adapt," said
    David Tapper, IDC's outsourcing director in an interview. "There is
    a shift from labour-centric contracts to ones that are more automatic
    and mimic the online model. Their business model will have to move in
    that direction. We're in the midst of a large global shift to a more
    complex environment."

    Tapper said IBM Global Services was the largest supplier of IT
    outsourcing followed by EDS, BT Group, CSC, and T-Systems. Together,
    they accounted for 53.5 percent of outsourcing contracts in 2005.

    "Customers are getting better at managing their suppliers," Tapper
    said. "They are going to specific (suppliers) for particular
    projects. They are parceling out work to different vendors." He noted
    that there has been a dramatic increase in deals under US$250 million
    from 8 in 2004 to 23 in 2005.

    The IDC analysis also found that the share of networking and desktop
    outsourcing contracts jumped from 14.6 percent of total IT outsourcing
    in 2004 to 32.4 percent last year.

    "Most of that increase is in networking," he said. "There is a
    shift to wide area networks. And there's complexity involved in the
    shift to convergence." He noted that networking, which is
    increasingly becoming a commodity, also embraces new solutions like
    VoIP. Customers and outsourcing vendors alike must deal with the new
    requirements of networking.

    The market research firm also found that the number and value of
    business outsourcing contracts declined in 2005 while IT outsourcing
    deals increased in value and number. Tapper said outsourcing suppliers
    will have to continue to address both business and IT outsourcing going

    Tapper said vendors will have to radically alter their delivery models.
    "They will now need to include more flexible and newer service
    capabilities along with globally based delivery, and develop
    dynamically different ecosystems of partnerships," he said.

    For further information about voip you can visit
    Knowing About, Oct 13, 2006
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