To print: Click here or Select File and then Print from your browser's menu

This story was printed from silicon.com, located at http://www.silicon.com/

Story URL: http://comment.silicon.com/0,39024711,10005150,00.htm

IT outsourcing: The times they are a-changing
But growth of consortia and shared risk/reward is likely to lead to more robust deals

By silicon.com

Published: Tuesday 15 July 2003

The heady days of double digit growth in the IT outsourcing market may be gone but statistics out today show the UK is still a relative brightspot compared to the rest of the world.

Recent deals that have led to this include the Abbey National's £70m desktop services deal with Computacenter and Barclays $350m deal with EDS. And then there's major government contracts including the MoD's £4bn defence information infrastructure outsourcing and the re-tender of the Inland Revenue's £4bn contract, both of which are up for grabs.

But behind the headline figures it appears several new trends are emerging. Indeed the times they are a changing. It is a theme echoed by respected IT services industry analyst house Ovum Holway, which had David Bowie's 'Changes' blasting out of the PA at its recent annual 'State of the UK IT nation' dinner with the heads of all the major services players.

The days of the single vendor winning the billion pound mega-deals are pretty much over, with consortia of specialist service providers opting to share the risk and rewards of the big deals still out there.

As Richard Holway himself said in his daily 'Hotnews' service: "In 1990, partnering to win a mega outsourcing deal was unknown. Now it’s almost de rigueur." This has led to an opening up of the market with the likes of Accenture and HP now taking on the big guns of CSC, EDS and IBM.

And after years of experts warning that outsourcing purely to cut costs is a recipe for disaster, TPI claims businesses are finally using outsourcing as a way to overhaul business processes as well as reduce costs – a factor in the growth of BPO.

So, while the excesses of the 1990s may be nothing more than a distant memory these changing trends are for the better and mean the shared risk and reward of the next generation of IT outsourcing is likely to benefit both users and service providers.