Cloud services continue to shake up IT outsourcing industry

By Stephanie Overby , CIO |  Cloud Computing, outsourcing

As for IaaS, some business units are buying into the public cloud on a small, workload basis, but corporate IT still prefers dedicated services -- private clouds either hosted themselves or in their provider's data centers. "In our new scope and renegotiation deals, we're working with clients and providers to make sure they have the option to move workloads to the provider's shared IaaS platform in the future, but that percentage is still very slow," says Jones.

[ Related: How to Choose Your Cloud Service Provider ]

Emerging SaaS and IaaS providers are growing the fastest, says Jones, but their customer base is small. Mid-market hosting companies are getting invited to bid on more deals but they have less experience managing large, multi-sources environments, according to Jones. "We think these players will continue to grow very quickly because (as discussed above) they can take share from incumbents around specific enterprise horizontals (CRM, HR, and email). Traditional software vendors have a chance to take infrastructure away from traditional service providers for specific application towers. However, they'll only be cannibalizing their own revenue streams."

Traditional Western IT providers are expanding into cloud services, but may have difficulty integrating their acquisitions in this area, says Jones. Indian IT service providers' application transformation work is the perfect "gateway to cloud," Jones says. However, their historical resistance to investing in assets means they will have to rely on partnership if they want to play in the cloud space.

Stephanie Overby is regular contributor to's IT Outsourcing section.Follow everything from on Twitter @CIOonline, on Facebook, and on Google +.

Read more about outsourcing in CIO's Outsourcing Drilldown.

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