Gartner highlights outsourcing drive

More than half of European organisations plan to increase their use of outsourcing this year, according to Gartner, even though overall spending may not rise.

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More than half of European organisations plan to increase their use of outsourcing this year, according to Gartner, even though overall spending may not rise.

The analyst group found 53 percent of organisations said they would outsource more in 2010, with 40 percent of organisations planning to boost spending on external IT services.

There is a growing trend for some organisations to outsource the majority of their IT, a Gartner survey revealed.

The percentage of organisations spending 50 percent to more than 75 percent of their IT spending on external service providers is on the rise, the analyst house noted.

“However, the results also showed that the pressure on capital and IT operating expenditure is still strong, and European organisations expect providers to deliver further cost reductions,” said Claudio Da Rold, vice president and analyst at Gartner.

“Although 40 percent of respondents said that they will increase the external share of their budget, only 24 percent said that they will increase the budget for providers, and almost a quarter of organisations still expect that their IT services budget will continue to decrease in 2010.”

Gartner has found evidence that outsourcing is increasingly attractive to smaller organisations. It found that almost 15 percent of organisations with IT budgets of less than €1 million (£830,000) expressed interest in outsourcing, up from barely six percent in 2009.

"Organisations can see that managed services and cloud computing financial models allow them to achieve their goals whilst reducing capital expenditure, said Nathan Marke, CTO of IT services company 2e2.

He highlighted the way infrastructure as a service and platform as a service offerings could allow organisations to re-platform legacy applications and sweat their assets for longer.

However, Gartner suggested that after several years of rapidly increasing interest in software as a service (SaaS), cloud computing and infrastructure utility (IU) delivery models, demand for these “industrialised services” delivery models may have peaked.

Gartner found cost control is the major consideration in outsourcing decisions but end users also increasingly require access to resources and capabilities, flexibility and scalability. “This more complex set of business requirements is not easy to address," said Da Rold.

An online survey was conducted among 206 organisations in Europe during in the first quarter of 2010. The survey was directed at individuals who were involved in decision making on outsourcing and IT services in 2010.

Gartner will be holding its Outsourcing & IT Services Summit 2010 in London on September 20-21.

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