December 8, 2005 12:43 PM PST

Study: IT outsourcing services multiply

A growing number of firms are trying to relieve businesses of their information technology chores, according to a new study.

The report, conducted by market research firm IDC, says a new crop of competitors are challenging computer service giants like IBM and Electronic Data Systems (EDS) with low prices, specialized expertise, and advanced technology.

Up-and-comers in the IT outsourcing market include Dell, which specializes in the desktop management, and Lucent Technologies, which focuses on network maintenance. Although the services of these equipment makers are relatively limited, each has inked big contracts based on their specialized expertise and low prices, IDC said.

Computer services firms in India, including Tata Consultancy Services, Wipro Technologies and Infosys Technologies, are also elbowing into the market with low prices.

Meanwhile, companies like Salesforce.com, which offer off-site, subscription-style software, are providing a new twist on outsourcing by tapping the Internet. As a hosted service, Salesforce.com maintains customer systems remotely.

IDC expects Amazon.com, eBay, Travelocity, Google, AOL and Yahoo, to move deeper into "on-demand" business services as well.

Despite all the new competition, the top three IT outsourcing firms in the world--IBM, EDS, and Computer Sciences Corp. (CSC)--haven?t budged from their positions, the IDC report said. Based on 2004 revenue, IBM occupied the top spot with 15.5 percent of the global market last year, while EDS ranked No. 2 with 11.7 percent, according to IDC figures. Third ranking CDC's share was 5.5 percent.

Among the world's 10 biggest firms in the market, Hewlett-Packard services revenue grew the fastest, by 22 percent, last year by IDC calculations. IBM, Capgemini and Northrup Grumman also logged double digit-growth.

IDC based its figures on broad outsourcing contracts for data center management combined with desktop care, help desk support, network operations, applications maintenance or disaster recovery services.

The global market for such services in 2004 hit $84.6 billion, according to IDC. The research firm said it expects the market to grow nearly 6 percent annually through the end of the decade, reaching $112.5 billion in 2009. The $33.8 billion U.S. market will grow at 4.2 percent, IDC predicted.

The moderate rate of growth combined with the increasing competition means more mergers are on the way, IDC analyst David Tapper said. "It's a stable set of players, but there is going to have to be consolidation," he said.

13 comments

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Ther funny thing is
I had 2 jobs go out to India in the last 4 years. 1 went to Tata & 1 to Wipro.

I WAS a mainframe developer. I designed & wrote applications.

Now I am an Appl. Arch./Integration Arch./Tech. Manager & I earn 25% more than in my last offshored job.

Guess what's going to happen to entry-level coders - CODE-GENERATORS. I was using code generators as long ago as the 1980's. They weren't much good - but then, they were trying to generate malformed code.

With todays emphasis on architectually correct code, it is once again the ideal time for the latest generation of code-generators to surface.

The upshot is (if generators take hold) all those coding jobs, offshored to India, Phillipines & China - kiss them good-bye. Consultants in the USA, earning far more than their older coding buddies will use GUI clients to diagramatically design components, to be generated by code-generators.

Status quo is back again - ain't life grand :-)

I won't miss the evening status calls to Manila.
Posted by (409 comments )
Reply Link Flag
True True...
And then you're gonna charge a bloated amount to do that... and the companies will rush back to us... I like the cycle too...
Posted by v0rt3x (3 comments )
Link Flag
If you think about it
Modern IDEs have already replace a lot of low level labor. Think about how much time you used to spend in CICS and COBOL designing a user interface. Then compare it to what it takes to design a sophisticated interface using something like VB.

Price elasticity of demand dictates that lower priced services lead to increased consumption (up to a certain point)

By lowering the price of software development, businesses can consume more systems. This creates opportunities at all ends of the scale.

While some people will be hurt by change in the way business is done, others will benefit. The key is to understand the changes taking place in our economy and to react accordingly.


Steve Larrison
<a class="jive-link-external" href="http://www.surviveoutsourcing.com" target="_newWindow">http://www.surviveoutsourcing.com</a>
Posted by (11 comments )
Link Flag
rhetoric obscures the facts
According to the Bureau of Labor Statistics, in this century US job growth has been concentrated in non-tradable domestic services. There has not been on net new manufacturing or high tech job. This is the labor profile of a third world country, not a superpower. Any laid off software developer that finds a permanent job is extremely lucky. More education is not the answer, because there is nothing to retrain for, with the exception of nursing and teaching. Even in these professions, cheaper foreign workers are brought in on H1-B and L-1 work visas. Virtually any white or blue collar job can (and is) being moved offshore. Americans simply cannot compete in labor markets with Chinese, Indians, and Eastern Europeans. The economy's 3+% growth is the result of consumers going into unprecented debt - it is not the result of new and better paying jobs. <a class="jive-link-external" href="http://www.vdare.com/roberts/051202_jobs.htm" target="_newWindow">http://www.vdare.com/roberts/051202_jobs.htm</a>
Posted by (12 comments )
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for more information to surf our website www.lpoindia.org

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Posted by raghuvir1 (1 comment )
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Share the feedback.

With my kindest regards,

Pankaj Parnami

+91 - 98107 37210

KPO CONSULTANTS
CONSULTING. TRAINING. PLACEMENTS. WORKSHOPS. LPO WATCH.

pankaj@kpoconsultants.com | parnamipankaj@gmail.com
www.kpoconsultants.com | www.kpoworkshops.com
Posted by kpoc004 (2 comments )
Link Flag
LPO DIRECTORY & LPO WATCH.
KPO CONSULTANTS launches:

? India?s First Directory of ?LPO Vendors in India? ? visit <a class="jive-link-external" href="http://kpoconsultants.com/" target="_newWindow">http://kpoconsultants.com/</a> and download more information.

? Next edition of LPO Watch ? visit <a class="jive-link-external" href="http://kpoconsultants.com/lpowatch.htm" target="_newWindow">http://kpoconsultants.com/lpowatch.htm</a> and download.

Share the feedback.

With my kindest regards,

Pankaj Parnami

+91 - 98107 37210

KPO CONSULTANTS
CONSULTING. TRAINING. PLACEMENTS. WORKSHOPS. LPO WATCH.

pankaj@kpoconsultants.com | parnamipankaj@gmail.com
www.kpoconsultants.com | www.kpoworkshops.com
Posted by kpoc005 (2 comments )
Reply Link Flag
Launch of LPO Watch Offline Edition.
Launch of LPO Watch Offline Edition


Dear Friend,

A warm hi !!

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Regards,

Team
KPO CONSULTANTS
www.kpoconsultants.com
Posted by kpoc004 (2 comments )
Reply Link Flag
IT Outsourcing Philippines
Here's a great IT Outsourcing company in the Philippines. <a class="jive-link-external" href="http://nmgresources.ph" target="_newWindow">http://nmgresources.ph</a>
Posted by fuzylogic28 (2 comments )
Reply Link Flag
IT Outsourcing in the Philippines
<a href="http://nmgresources.ph"><strong>NMG IT Outsourcing Philippines</strong></a> is an
outsourcing company here in the <strong>Philippines</strong> that offers <strong>
<a href="http://nmgresources.ph/nmg_it_outsourcing.php">Web Development</a></strong> using mostly <strong><a href="http://.nmgresources.ph/linux_apache_myssql_php.php">LAMP Platform</a></strong>, <strong>Linux</strong>,
<strong>Apache Web Server</strong> , <strong>MySQL Database</strong>, <strong><a href="http://nmgresources.ph/php_philippines.php">
PHP Programming</a></strong>


Best Regards,
Jairus Bondoc
Posted by fuzylogic28 (2 comments )
Reply Link Flag
Great post.....Nice information....
Regards,
&lt;a href="http://www.saibposervices.com/Knowledge_process_Outsourcing_services.aspx"&gt; KPO&lt;/a&gt;
Posted by sblservices (13 comments )
Reply Link Flag
Philippine BPO providers have proven to be the ideal choice when it comes to off-shore outsourcing.
Posted by clintgrover (1 comment )
Reply Link Flag
 

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