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Decline in IT Outsourcing Market Challenges Service Providers

Stephanie Overby | Jan. 28, 2013
With the overall IT services market on the decline, providers may look to emerging markets and emerging technology offerings for growth.

They're also putting together offerings that stitch together mobility, analytics, social media, and cloud computing.

"We just don't see any one of these technologies moving the annual contract value needle on its own. There simply aren't a lot of $250 million cloud services contracts filling up industry pipelines, and we don't really anticipate that changing anytime soon," says Keppel. "And as these trends converge, we believe clients will seek to use more collaborative approaches to identify service provider solutions that can help them achieve a transformative effect."

According to KPMG's quarterly report, there "is an ongoing bifurcation between leaders and laggards in the service provider market based on industry and business process experience and diversity of services mix, including cloud and analytics."

But, says Keppel, "to win this kind of business, service providers will need to rethink their approach to the market and their relationships with clients."

Infrastructure-as-a-service could also be a bigger opportunity for outsourcing providers in 2013. While 57 percent of outsourcing customers surveyed by Everest Group said they already had a software-as-a-service model in place, just 32 percent had existing cloud infrastructure with 48 percent indicating that they had plans to implement it.

 

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