IT Outsourcing market set to reach $288bn

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The worldwide IT outsourcing (ITO) market is forecast to reach $288 billion in 2013, a 2.8% increase from the year previous.

That is according to Gartner, who claim nearly all ITO segments are now forecast to grow more slowly during 2013.

“We continue to see overall market growth being constrained by near-term market factors, such as evolving ITO delivery models, economic, political and labor conditions, and service provider financial performance,” said Bryan Britz, research vice president, Gartner.

“Mature Asia/Pacific and Western Europe are the regions where the outlook is most tempered, partly due to currency but also reflective of our view that 2013 is likely to be similar to 2012 in these regions.”

Gartner’s forecast includes slight upward revisions for both custom application outsourcing and infrastructure utility services (IUS) for 2014 through 2017. Although software as a service (SaaS) impacts the ITO market, it is forecast as part of the software market, rather than as part of the ITO market.

“Planned new adoption of ITO remains positive in all service line segments. However, constrained IT budgets, an evolving ITO delivery model, economic conditions and cost-focused buyers are limiting the growth potential of the ITO market,” Britz said.

“Enterprise buyers pursuing hybrid IT strategies and small and midsize business buyers adopting infrastructure as a service (IaaS) are key drivers in cloud and data center service segment growth rates.

“The global market size for data center outsourcing is in gradual decline due to workloads moving to IaaS and to IUS exceeding the net-new adoption of data center outsourcing.”

End-user outsourcing

Britz claimed accelerated buyer plans related to bring your own device (BYOD), and reduced enterprise support requirements for end-user devices produce a more tempered outlook for end-user outsourcing than in past quarters.

Outsourced support for mobile end user devices will see strong growth through 2017 due to increased enterprise adoption of mobile devices, including smartphones, tablets and other handheld devices. Desktop outsourcing, however, is in a gradual decline.

“Historically, ‘run the business’ costs have been less impacted by economic challenges than has discretionary spending on new projects,” Britz said.

“Nevertheless, increased client adoption of pricing models that create volume variability is causing the ITO market to exhibit more cyclical patterns.

“This shift will continue as clients seek to reduce the nearly two-thirds of IT budgets devoted to operations, while shifting the expense from capital expenditure to operating expenditure through the consumption of ITO service lines.”

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