During the first half of this year, 27 percent of existing IT infrastructure outsourcing deals were terminated. “Anti-incumbency” sentiment among IT service buyers has been prevalent as well. Stephanie Overby writes about why IT outsourcing is not so stable at the moment, and what you can do to maintain your business.
Disappointment with service delivery, desire to unbundle IT services, and an anticipated inability of outsourcers to provide for next-gen technology needs are all reasons why providers are switching. There is a growing trend of shorter term outsourcing contracts, in the area of three to five years, to accommodate for a change in provider needs. Another instigator disrupting the status quo is the cloud, as outsourcing with a cloud component shifted from being part of 5.8 percent of deals in 2011 to 10.5 percent in 2013. Mobility, analytics, and even robot automation are further stirring the pot of changes.
What you can do is be looking to take advantage of these changes yourself, to place yourself in a position to cater to the expanding demands of providers. Overby cites Sanil Dani of the Everest Group about what specifically you can do in response to stability challenges:
Dani advises buyers to continuously evaluate outsourcing portfolios to identify opportunities based on provider capabilities and expertise, delivery rationalization, and newer technologies. And services providers must come to terms with an anti-incumbency bias that is likely to grow strong in coming months. Vendors must make greater investments in strategic relationships as they near the ends of their terms and further develop their cloud, mobile, analytics, and automation capabilities “given [their] impact on non-linear growth,” Dani says.
Instability does not spell imminent danger. It just means you need to be that much more diligent to maintain your success. For more, you can read the full article here: http://www.cio-asia.com/mgmt/outsourcing/it-outsourcing-market-far-from-stable/