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IT outsourcing year in review, rating our 2011 predictions

Stephanie Overby | Dec. 15, 2011
We revisit our CIO.com IT outsourcing predictions for 2011 to determine which one were solid hits, which were foul tips, and which were swings and misses

As the end of the year approaches, the predictions of what's to come in the next 12 months abound. Of course, those predictions are usually quickly forgotten and no one rushes to issue a scorecard for how they fared -- but that's not the case at CIO.com. This year, we're revisiting the 11 outsourcing trends we forecast for 2011 to find out which of them actually came to pass.

If we were a baseball team, we did great as just less than half of them were right on target. However, this is the IT outsourcing game where service-level expectations hover around 99.99 percent. And some of those predictions were strikeouts: Egypt takes center stage? A major merger between a big Indian and U.S. provider? Swings and misses.

As we pull together our 2012 prognostications, here's how we rated those 2011 predictions:

IT Outsourcing Prediction Hits

IT leaders scour existing contracts for cost savings

Dive for dollars, they did. However, as Adam Strichman, founder of an outsourcing consultancy and price benchmarking veteran points out: "That was really a gimme. They always do that."

"With constant budget pressures and CEOs and CFOs pushing to do more with less, many IT leaders are renegotiating their deals mid-term in an effort to generate incremental savings," adds David Rutchik, partner with outsourcing consultancy Pace Harmon. But 2011 may have been the year that they reached the point of diminishing returns in this endeavor. "Much of the potential gains have already been achieved," says Stan LePeak, director of research for advisory services at KPMG. "Contract restructuring, to bundle more work with one provider or take more work offshore, for example, will lead to greater savings.

Legacy outsourcing providers fumble their way into cloud offerings.

There's been more talk about new " cloud services" from legacy outsourcing providers than there has been any truly new services, says LePeak. But that may have worked in their favor, at least temporarily, " with cloud networks getting breached more often and consumer data exposed," says Mark Ruckman, an outsourcing consultant with Sanda Partners. " Security is the major concern with cloud, so essentially, they are repackaging the same offerings they always have had, and calling them cloud," adds Strichman. "The legacy providers recognize the risks to security, customer data, and sharing of infrastructure and resources which clouds require—probably better that the cloud providers understand it.

Outsourcing providers hold firm on prices rather than conceding to demands for price reductions.

While there were certainly cases of price concessions by providers in 2011, there was often some kind of quid pro quo deal. "They caved some on price," says Ruckman, 'but requested longer terms," in exchange. "No providers want to buy business or get into unprofitable deals," KPMG's LePeak says."

 

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