Where Outsourcing Dollars Go

By Donald Sears  |  Posted 2010-10-31

The last three years have seen outsourcing as an expense of IT operating budgets rise from less than 4 percent in 2008 to over 7 percent in 2010, according to a Computer Economics (CE) study dubbed "IT Outsourcing Statistics 2010/2011."

That's good news if you work for an outsourcing services provider. But what kind of services are IT departments spending on? Surprisingly, CE finds the most popular form of outsourcing by frequency and level are Web and e-commerce systems. By frequency alone, hosted applications and SaaS services lead the pack. But as CE points out in an email release about the report: "[T]he percentage of the typical portfolio being outsourced is still small, and the outsourcing cost and service success rates are low compared to other IT functions in this study."

Some other things of note:

  • 44 percent of companies surveyed who are utilizing outsourced desktop support report saving money--this is the biggest area of cost savings.
  • 50 percent of companies who outsource IT security see improved service levels.
  • Sales staffs at SaaS and hosted application companies are having strong success with penetrating deeper in to those accounts for further business.

John Longwell, CE's VP of research puts the outsourcing trends in perspecitve:

[T]he bottom line is that IT organizations are outsourcing a greater portion of their IT functions today than just a few years ago. The recession seems to be accelerating an ongoing trend, but there are other factors.We're seeing a sharp rise in the number of organizations outsourcing applications to SaaS vendors, for instance. Cloud computing is a development that will result in more money being spent with outside service providers, regardless of the macroeconomic climate.

The message here for job seekers: Web services, cloud infrastructure management, security and services providers are excellent companies to target for jobs. Look for those companies who are dominating a niche. Do your homework and network with these companies.

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