12 IT outsourcing predictions for 2012

By Stephanie Overby , CIO |  IT Management

Buyers that remain in the market will focus their outsourcing dollars on a smaller number of deals with simpler pricing models -- —at least in the first half of the year, says outsourcing consultancy Everest Group, adding that by fall increased business confidence could boost outsourcing activity in general, and offshoring deals in particular.

3. The Cloud Comes Down to Earth Do you get the feeling that even cloud computing providers are ready to retire the term cloud computing? The good news, says Shaw Helms, a partner at the outsourcing practice of K&L Gates, is that "by the end of 2012, the buzz around 'cloud' will have significantly died down." IT leaders and managers will be looking more critically at cloud computing risks and being more critical of its value. "IT departments will no longer be getting pressure from the C-Suite to implement cloud computing without a thoughtful evaluation of the alternatives," Helms says.

2012 will also be the year that IT gets serious about cloud computing governance. "Companies will begin to publish firm policies on what can be cloud, who has to review cloud services, what data can go into a cloud service, and who has to be involved in [cloud] decisions," predicts Adam Strichman, founder of outsourcing consultancy Sanda Partners. "Things like, 'What are the privacy laws in the country that houses the data'" and 'What are security restrictions for people who have access to the data.''

4. IT Service Buyers Look Beyond Labor Arbitrage (But Vendors Don't) Outsourcing customers still want to keep costs low when they farm out IT services. But next year, they'll want more -- —increased global flexibility or better technology, for example, says Fersht. The only problem is that their IT service providers will still be reading from the labor arbitrage handbook. "Providers will still be overly focused on cost reduction for their clients, as opposed to process improvement and innovation," Fersht says.

5. IT Outsourcing Deals Gets Small It used to be "go big or go home" for the sales teams of big outsourcing providers. But now that they've wrung everything they could out of the Fortune 1000, they're setting their sights on smaller enterprises. "Even IBM is making a concentrated effort to win more business from small firms," notes Helms of K&L Gates.

Originally published on CIO |  Click here to read the original story.
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