12 IT outsourcing predictions for 2012

By Stephanie Overby , CIO |  IT Management

In 2012, profit margin will trump deal size for the first time, "Service providers looking for market share are becoming increasingly willing to cannibalize their revenue by introducing pricing models based on consumption and business outcomes," says John Lytle, consulting director for outsourcing consultancy Compass. "The result: lower costs for clients and smaller deal sizes. Providers, meanwhile, are able to leverage economies of scale and are incentivized to deliver services more efficiently." The only ones left out in the cold will be outsourcing consultants and lawyers who will have to figure out how to get deals done faster and cheaper, says Helms.

6. IT Offshore Providers Take Over Infrastructure Outsourcing Offshore service providers have been slowly but surely building the infrastructure capabilities in hopes of moving beyond application development and maintenance work. This year, that effort pays off. "2012 will see a number of companies that have relied almost exclusively on U.S.-based IT infrastructure providers continue to shift business to offshore companies," says Steve Martin, partner with outsourcing consultancy Pace Harmon.

7. IT Service Providers Account Managers Get the Boot Outsourcing customers growing annoyance with provider account management services will reach a rolling boil next year. They're tired of too much focus on sales and not enough attention to their unique needs, says Fersht of HfS Research. Providers will struggle with the account management role, a title with a seeming revolving door of talent whom they've long rewarded largely for business development. Account managers will have to start putting relationship ahead of revenue. Bye-bye, sales guy.

8. More Backsourcing Talk Than Action Outsourcing clients will continue to complain about their IT services relationships in the coming year -- — and then decide it's just too much work to bring it all back in-house. "Companies will evaluate, strongly consider, and even begin to architect the movement of currently outsourced services to an insourced service delivery model -- —only to fail to pull the trigger in the end," predicts Pace Harmon's Marin. "While the economics and potential for service improvement through assuming control of one's own destiny will appear enticing at the business case level, the tasks of building data centers, standing up help desks, and hiring hundreds of resources will prove too daunting."


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