IDC Reports IT Outsourcing to Remain Bullish and Lead the Charge for IT Services

Auckland, New Zealand, June 25, 2009 -- As the economic downturn continues, managing a tightening IT budget has replaced shortage of skilled labour as the main reason to outsource. Demand for outsourcing remains high nonetheless. The sector grew 6.9% year-on-year in 2008, outpacing overall IT services growth and is expected to do so for the next five years, according to a new report from IDC.

The report titled, New Zealand Outsourcing Services 2009 – 2013 Forecast & Analysis states the IT outsourcing market is forecasted to reach NZ$1,543.77 million in 2013, representing a compound annual growth rate of 4.5% over the coming five years. By the end of the forecast period, this market is projected to represent 47.6% of the entire IT services market.

"In this time of uncertainty, most organisations, government agencies included, developed a preference for outsourcing and managed services. This is driven by end users’ favour for predictable periodic expenses and potential cost savings from vendors' economics of scale," said Adam Lee, IDC Associate Market Analyst for the New Zealand IT Services market.

Besides an uptake in hosted delivery models, virtualisation and automation in IT outsourcing, the IDC report also look at innovative pricing models that better align customer and vendor interests. "With some skin left in the game, vendors can better convince customers of their commitment towards fulfilling SLAs. Outcome-based contracts and price-per-mainframe capacity are some of the examples," added Lee.

The report illustrates the continual preference for discrete outsourcing over enterprise-wide IS outsourcing. The trend translates to increasing pressures on vendors to help customers ride through the storm, either via technology or better serving customers' business needs.

Source: IDC