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IT outsourcing market far from stable

Stephanie Overby | Sept. 22, 2014
IT services deal activity was steady in the second quarter, but the IT and business process outsourcing industry is undergoing significant shifts as customers fire existing providers, ink shorter deals and embrace emerging technologies.

"Disruptive technologies have the potential to fundamentally alter the traditional delivery constructs and provide opportunities to niche providers for more-than-normal growth and market share," says Dani.

These combined trends are likely to intensify through the remainder of this year, according to Everest Group. To date, "any of these are limited to specific buyer geographies and type of providers," Dani says. "Going forward, we see these impacting a broader and more expansive set of stakeholders than before.

How IT Outsourcing Customers Can Prepare

There are a number of steps outsourcing customers and providers can take to prepare for continued shifts in the IT outsourcing market.

Dani advises buyers to continuously evaluate outsourcing portfolios to identify opportunities based on provider capabilities and expertise, delivery rationalization, and newer technologies. And services providers must come to terms with an anti-incumbency bias that is likely to grow strong in coming months. Vendors must make greater investments in strategic relationships as they near the ends of their terms and further develop their cloud, mobile, analytics, and automation capabilities "given [their] impact on non-linear growth," Dani says.


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