Spending on IT outsourcing services to reach $251 billion in 2012: Gartner

Spending on IT outsourcing (ITO) services worldwide is likely to surpass $ 251 billion in 2012, according to the new research report by Gartner. Gartner, a leading information technology research and advisory company, in their research report titled “”Forecast Analysis: IT Outsourcing, Worldwide, 2010-2016, 2Q12 Update”   claimed that spending on IT outsourcing services will grow to reach $251.7 billion, an increase by 2.1% when compared to the spending of 2011 which was $ 246.6 billion. The research report also highlights that ITO spending in Asia-Pacific region will be the highest.

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According to the figures in the report, IT outsourcing spending in Asia-Pacific region will grow by 1% in 2012 and will attain 2.5% growth in 2013. The growth in ITO is driven by the increased capital inflow to countries in the Asia-Pacific region for the past three to five years. This has increased the need for the businesses to scale up their operations and capabilities to deliver the desired services. As per Gartner, except for countries like Japan, Australia, New Zealand, Singapore and Hong Kong, IT outsourcing is something new to the business organizations in Asia-Pacific regions.

Research analysts from Gartner are of the opinion that reluctance from the part of enterprises in North America for further heavy capital investment and their IT strategies to reduce investment in IT assets will drive them to choose the services offered by external providers. Moreover the transition of IT related works to annuity-based relationship services to reduce IT cost in these regions will further keep the ITO growing throughout 2016.

Excerpts from the research report:

  1. Spending on ITO to increase by 2.1% to reach USD251 billion in 2012.
  2. ITO spending to increase by 1% in the countries located in Asia-pacific region.
  3. Increase in the capital inflows into Asia-Pacific regions in the past few years is driving ITO growth.
  4. Transition of IT works to annuity-based relationship services and the reluctance of the enterprise to make capital investment on IT will drive the spending on ITO services in North-American countries.
  5. Economic pressure on European countries followed by lesser budget on IT spending will push the European public entities to rely on external IT service providers to reduce IT cost.
  6. Cloud computing services are the fastest growing segment among the ITO market, which is a part of Infrastructure as a Service (IaaS).
  7. Cloud computing services are expected to grow at a rate of 48.7% to reach $5 billion in 2011.
  8. Automation of existing application and entry of next generation application will increase the value of ITO in terms of services consistency and agility.
  9. Privacy and compliance concerns will have adverse effect on ITO growth in some regions.
  10. Data Center outsourcing (DCO) will witness a decline in the growth by 1% in the year 2012. Existing data center process will be replaced by new delivery models by 2016 which will enable the companies to address the requirement of clients from midsize business.
  11. Spending in Application Outsourcing (AO) is expected to grow by 2% to reach $40.7 billion when compared to spending of $ 39.9 billion in 2011. In next few years, Software-as-a-Service (SaaS) enabled in cloud service will trigger the growth in the AO segment.

Further, the report also discusses the impact of the ongoing European crisis and declining exports in China on the ITO spending.

You can get more details about the Gartner report.

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