Companies Expected to Boost Offshore
22/5/2005
Demand for offshore outsourcing services will continue to grow substantially over the next several years, as companies try to squeeze more value out of every IT dollar they spend, according to recent reports from three major analyst firms. In a report released last week, Meta Group Inc. in Stamford, Conn., predicted that offshore outsourcing will grow more than 20% annually, pushing it from a $7 billion market today to about $10 billion by 2005. Almost all application outsourcing services will include an offshore component, and the market will reach $15 billion by 2007, the Meta report added. The focus on lowering IT costs is accelerating the use of offshore services, according to a Gartner Inc. report released earlier this month. Although companies are tapping offshore vendors primarily for application management purposes, demand is also emerging for business process outsourcing and infrastructure management services, Gartner said. "There is a growing sense that IT infrastructure management is something that can be packed up in a box and shipped off to someone who can do it more efficiently and at a lower cost, "said Bruce Caldwell, an analyst at Gartner, which is also in Stamford. "People are looking to offshore as a low-cost and immediately available alternative" to buying and deploying such technologies themselves, Caldwell said. One-third of the respondents in the survey of 145 "decision-makers" at North American companies said they use offshore services and plan to spend more money on them in the future, Forrester said.
But "18% of respondents using offshore providers reported a major challenge in measuring performance, while 20% have serious issues specifying the work needed to be done," the Forrester report concluded.