The Long Road Back for IT Outsourcing

During the lowest of lows of the past five fiscal years, companies in every industry were forced to make excruciatingly tough decisions to stem the bleeding. Paying for tech consultants and analysts was often an easy first cut and made sense because companies had less money to spend on software and hardware anyway.

This economic reality forced IT service providers to take what they could get by renegotiating terms and costs at the customers’ demand in order to salvage whatever business they were still desperately cling to.

As Datamation reports, early rumblings from major IT outsourcing firms suggeststhe outsourcing market is poised for a bit of a recovery around the world but it will be slow and sustained.

For the most part, enterprise customers will have need for outsourcers to catch up with all the back-burnered projects they’ve ignored for three or four years and to implement a broad-based cloud computing infrastructure.

Despite predictions to the contrary, IT outsourcing has contracted rather than expanded in the years since we entered the Great Recession, according to industry watchers. That shows signs of changing in 2010, but analysts forecast that IT outsourcing growth will remain slow for some time to come.

“Most companies in most of the categories we track are only partially outsourcing a function,” said John Longwell, vice president of research at research firm Computer Economics. “Most of them are using outsourcing to fill in around the edges. A lot of those companies went back to reviewing and reducing their outsourcing [when the recession began]. The general trend was that companies were taking it back in house.”

Read the full story at Datamation:

Outsourcing Trends Slow Growth Cloud Computing

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