Johannesburg, 21 May 2001
Worldwide spending on information systems (IS) outsourcing services reached $56 billion in 2000 and is expected to surpass $100 billion by 2005, according to IDC. Although the US will continue to account for the bulk of this spending, all companies around the world are increasingly turning to outsourcing to remain competitive in the global marketplace.
"IS outsourcing services outside the US have increased substantially as a result of the healthy growth of outsourcing in traditional markets and the increasing acceptance of outsourcing in formerly untapped areas of Central and Eastern Europe, Latin America, Asia/Pacific and Japan," said Cynthia Doyle, program manager of IDC`s IT and Offshore Outsourcing Strategies research. "As companies worldwide deal with forces such as deregulation, privatisation, recession, globalisation, lack of skilled personnel, shortages of resources, and dynamic technological and economic changes, outsourcing will continue to be an attractive operational alternative and source of competitive advantage for them."
According to IDC, the US will continue to spend the most on IS outsourcing services, accounting for 44% of worldwide IS outsourcing spending in 2005. "Recent solid growth across several industries in the US is the result of continued strong demand for multi-service IS outsourcing contracts that can include data centre operations, desktop management, LAN/WAN management, application development and maintenance, help desk support, disaster recovery services, and Internet and e-business services," Doyle said.
Western Europe is the second-biggest spender, with spending on IS outsourcing services increasing at a compound annual growth rate (CAGR) of 10.3%, from $16 billion in 2000 to more than $26 billion in 2005. IDC forecasts the rest-of-the-world market segment will experience the highest spending increase during this time, with a CAGR of 21%. On its heels is Asia/Pacific, with a 2000-2005 CAGR of 20%.
Although the traditional drivers of outsourcing to reduce operation costs, improve IS flexibility, focus on core competencies, and increase operational efficiency still stand, IDC cites mounting evidence that companies have turned to outsourcing for more strategic reasons, including keeping up with cutting-edge technology, building partnerships, creating value for the organization and its customers, and broadening infrastructure and operational reach.
IDC`s report Worldwide IS Outsourcing Market Forecast and Analysis, 2000-2005 (IDC #B24547) analyses the IS outsourcing market. US and worldwide IS outsourcing spending forecasts are provided by region through 2005. Major trends, key drivers and inhibitors for outsourcing practices, and major vendors in each region are discussed.
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