IT Outsourcing To Make Gains in Europe

More European organizations are likely to increase their outsourcing initiatives, according to a new study by Gartner. That’s not a big surprise – back in December 2009, market research and advisory firm TPI said European companies were outspending their their North American counterparts by approximately $1.2 billion in average annual contract value (ACV) through the third quarter of 2009. You can read that blog here.

Anyway, Gartner says that 53 percent of organizations in Europe said they would outsource more in 2010, with 40 percent of organizations planning to boost spending on external IT services. These findings are based on an online survey of 206 organizations in Europe during in the first quarter of 2010.

So why this outsourcing growth spurt among European organizations? Gartner says smaller organizations are more likely to contribute to this growth – the study found that that almost 15 percent (with IT budgets of less than Ђ1 million, or about $1.27 million) expressed interest in outsourcing, up from barely six percent in 2009.Equally telling is the finding that companies are looking to outsource in order to better control costs while supporting an ever-demanding clientele of end users that want greater access to resources and capabilities, flexibility and scalability. “This more complex set of business requirements is not easy to address,” Claudio Da Rold, VP and analyst at Gartner, said in a prepared statement.

The increase in outsourcing usage—and the increase in spending on external IT services—is tempered with the fact that there continues to be pressure on capital and It operating expenditures, according to Gartner. Even though 40 percent are boosting spending on external IT services, only 24 percent of the respondents said that they will increase the budget for providers. Almost a quarter of organizations expect that their IT services budget will continue to decrease this year.

I’m curious – for those of you out there either working with an outsourcing provider on an existing contract, or planning to use outsourcing services in the next six months… what are your usage and/or spending plans like? Are you upping the ante, holding firm, or cutting back?

Source: CIO

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