The global IT outsourcing market grew by 13% over the year
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2023: The volume of the global IT outsourcing market grew by 5% over the year, to $557 billion
At the end of 2023, costs in the global market IT-outsourcing reached $557.05 billion. The indicator of the previous year, when expenses in this area were estimated at $528.11 billion, was exceeded by about 5%. This is stated in a study by Market Research Future, the results of which were published in mid-December 2024.
The IT services outsourcing segment is at a stage of sustainable growth, which is explained by several factors. The need for enterprises to reduce operating costs while improving efficiency is pushing companies to find outsourcing solutions. Organizations around the world recognize the importance of IT outsourcing to reduce costs while maintaining high quality service delivery. Relevant services are becoming more and more popular as activities scale up and expand. IT outsourcing enables businesses to focus on their core competencies, while experienced service providers are engaged in development, IT infrastructures implementation software , and technical support.
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The growing complexity of IT systems and cybersecurity problems are also forcing companies to resort to the services of third-party specialists. By delegating such tasks to outsourcing firms, organizations can focus efforts on core business operations. At the same time, enterprises are more inclined to look for partners that meet their sustainable development goals.
Technological advances are named as another driver of the industry. The rapid development of artificial intelligence, machine learning, cloud computing and automation tools is transforming enterprise operations. Outsourcing service providers implement these technologies to improve service delivery, improve efficiency, and reduce lead times. As a result, companies are increasingly relying on advanced IT solutions, which, among other things, provides a competitive advantage.
Among the key market segments, the authors of the study highlight application development, infrastructure management, business process outsourcing and cloud services. In 2023, the first of these areas provided revenue in the amount of $150 billion. Infrastructure management accounted for $130 billion, business process outsourcing - about $120 billion. But the largest contribution was made by cloud services - $157.05 billion. Among the major market players named:
- NPE;
- Tata Consultancy Services;
- NTT Data;
- IBM;
- Accenture;
- Cognizant;
- L&T Technology Services (LTTS);
- Capgemini;
- Atos;
- Infosys;
- Tech Mahindra;
- Wipro;
- DXC Technology;
- Fujitsu;
- CGI.
The leader in terms of geography in 2023 was North America, which provided almost half of the total revenue - about $250 billion. This is followed by Europe with an estimate of $150 billion, and the Asia-Pacific region closes the top three with expenses of $100 billion. South America brought in $30.05 billion, while the Middle East and Africa accounted for $27 billion.
The study found that the IT outsourcing industry is characterized by a dynamic landscape driven by technological advancements, changing customer requirements, and the need to improve cybersecurity. In 2024, it is estimated that costs on a global scale will amount to $587.57 billion. Market Research Future analysts believe that in the future, the CAGR will be at the level of 5.48%. As a result, by 2032, expenses may increase to $900.38 billion.[1]
2021: Global IT outsourcing market up 13%
The volume of the global market IT-outsourcing at the end of 2021 reached $360 billion, an increase of almost 13% compared to 2020. Such data at the end of April 2022 were announced by Statista analysts.
According to them, the costs of such services in 2021 showed an accelerated rise - before, positive dynamics were measured for a long time less than 10%, and in 2020 there was even a decline - the COVID-19 coronavirus pandemic took everyone by surprise, and at first many companies began to cut costs and abandon new projects, the study notes.
According to experts, the pandemic has changed the world and made us realize the importance of digitalization in a variety of industries. Working from home, remote access to software and hardware, delivery services are at the heart of all the trends that the pandemic has forced, the basis is a strong technological component, and it is often provided by outsourcing.
The COVID-19 pandemic has changed IT support requests. For obvious reasons, demand for infrastructure maintenance in offices fell sharply. But the need has grown to maintain the work of employees at a "remote location" - configuring the corresponding software, deploying "cloud" services, etc. The demand for creating virtual desktops, organizing services for working with documents, monitoring the working time of employees at a remote location, collecting data and preparing reports in a situation where employees are geographically scattered at different points has sharply increased.
Analysts believe that IT outsourcing costs will grow in all segments of this market and regions. The pandemic has intensified the trend of digitalization, which used to be mainly concentrated in industries such as health, finance or human resources. Another problem that IT outsourcing can solve is the lack of technical specialists, which is a big problem in many developed countries. The same problem is escalating in India, which is considered one of the world leaders in the field of IT outsourcing. The problem of the Indian market is due to the fact that specialists there are becoming more and more narrowly focused and in demand.
According to analysts, the time when the project to implement an IT system, service or platform could stretch for a year or two has irrevocably passed. The new conditions require the prompt launch of products on the market, the rapid return on the project, and the minimization of the "test period."
This means that the requirements for IT outsourcing companies are growing. The specialists of such companies should be ready to quickly deploy IT support - at the right time, in the right "place" and with a clearly calculated result.
IT outsourcing is moving to new technologies, the researchers said. Today's IT companies keep pace with the times and strive to automate workflows. The most advanced are already using, for example, robots, bots, artificial intelligence technologies and machine learning.
It is noted that despite certain instability in the economy and social shocks, 2019-2021 can be called successful for the IT outsourcing market, which continues to grow actively due to increasing demand from business. However, this market has undergone some changes, including high-quality ones: new prospects and development paths have appeared, there are more non-standard design tasks, business interaction processes have changed, and confidence in leading IT companies that outsource technology services has increased.[2]
2019
How India became the main IT outsourcer and why the failure has now come
In December 2019, the Financial Times (FT) published an article on how India became the main IT outsourcer and why it is now a failure.
At the turn of the century, Western technology companies worried that the "2000 error" (Y2K, the problem that developers released in ON the 20th century sometimes used two signs to represent the year in dates, for example, January 1, 1951 in such programs was presented as "01.01.51") could lead to a breakdown of computer systems. But the source of anxiety for one part of the world was a chance for a better life for another. Companies such as (Tata Consultancy Services the largest India in the IT outsourcer) have started to work, deploying teams of highly qualified and low-cost workers to update the internal systems of multinational customers.
 | The Y2K problem has become a defining moment, - said the executive director of TCSRajesh Gopinathan. - We have proven that we can solve problems at the local level, and where there is a local solution, there is a global one. |  |
By persuading foreign companies to outsource IT services to India, companies such as TCS, Infosys and Wipro helped the country join global sales chains. According to the industry group Nasscom, the annual income of the Indian IT industry is $170 billion, and 4 million people work in it. However, after the global financial crisis of 2008, customers became less willing to sign expensive contracts, reducing the income of outsourcers. Growth in India's IT outsourcing market declined from 50% to 10% in 2019, according to Credit Suisse.
The globalization in which IT companies flourished suddenly bristled. The practice of sending Indian employees to richer markets on visas to hire on the ground has sparked a political backlash in the US and elsewhere. The shift in interests caused by the trade war and USA , China as well as exiting Great Britain , EU prompted customers to hold onto funds previously outsourced. According to Nomura estimates, revenue growth of leading outsourcing companies will fall from 8.5% in 2019 to 7% and lower in 2020.
Similar trends have caused internal clashes. Thus, Infosys employees accused managers of dishonest business conduct when they tried to increase short-term financial performance. As a result, the company's shares fell in value, and the US Securities and Exchange Commission (SEC) launched its own investigation.
In addition, the market is trying to keep pace with technological advances. The growing number of companies offering cloud-based business software has provided customers with a cost-effective alternative to data banks on the ground. In turn, automation has reduced the need for a large number of contractors for routine tasks. Hence the decrease in demand for IT outsourcing service providers.
By 2019, companies selling off-the-shelf cloud-based business and management software like Zoho had begun to flourish. Director of Technological Development at Zoho Rajendran Dandapani notes that cloud technologies allow companies to use Zoho applications with minimal investment. For example, Zoho offers customers full access to their products for $1 a day.[3]
Notes
However, Indian IT giants such as TCS and Infosys believe they can turn these trends to their advantage. They invest heavily in developing AI-based "digital" devices to accomplish everyday tasks or deploy IoT-based technologies. These developments account for about a third of both companies' revenue. In addition, the global IT industry remains quite fragmented, which allows large players to gradually get rid of competitors.
Bangladesh squeezes India in number of programmers
The leader of IT outsourcing for 2019 is traditionally India, where there are many cheap programmers (even if most of them graduated from two-week courses).
But at this time, India is being squeezed by new players, such as Bangladesh, which has become, thanks to the accessible Internet in cities and a large number of qualified specialists, already the second most freelance employees in the world, it accounts for 16% of their total. According to this indicator, Bangladesh is still inferior to India (24%), but ahead of the United States (12%).
Russia ranks 12th in this market with a share of about 1%. This is stated in a study by the Oxford Institute. Internet
One in 10 of Bangladesh's 44 million young people are unemployed, with thousands of skilled professionals unable to find work. As a result, they get an additional specialty in IT and get an outsider in a foreign company. According to ICT, out of 650,000 freelancers in Bangladesh, about 500,000 regularly work, earning more than $100 million a year.
How XaaS models are changing the future of outsourcing
By May 2019, there was a confrontation between traditional IT outsourcing and the unstoppable growth of cloud models "anything-as-a-service" (XaaS). XaaS's scalability, control, and virtually unlimited flexibility attract more customers, undermining the foundations of conventional outsourcing. But experts are confident that both approaches can coexist peacefully.
XaaS has led to a paradigm shift in IT operations and infrastructure management. The need for IT outsourcing teams in its current form is certainly decreasing, but this means that specialists will no longer have to perform insignificant tasks. The freed up time, they can help organizations at a higher level - to innovate and use the experience of other enterprises from different fields, reports ComputerWeekly.
New approaches
Undoubtedly, IT leaders seek to find the most effective outsourcing strategies in a changing IT environment while taking into account the benefits of all techniques. Transactions in the field of both traditional IT outsourcing and XaaS have grown significantly since 2016, although by different amounts - by 11% and 71%, respectively, by 2019.
Companies burdened with high costs for traditional IT services, of course, will benefit from the transition to the XaaS cloud model. However, the true value of this transition will lie in the new technological opportunities provided to firms - because their savings will be reinvested in digital strategy initiatives.
Of course, pricing will remain the main part of any outsourcing offer, but the value assessment should not be carried out on the cheapest offer, but on the ratio of price and general quality of the service. For many IT organizations, this is no longer about efficiency, but about creating value-based services. IT is no longer a supporting feature, it is at the heart of creating all of the company's products, services, and operations.
Aggressive competition
In 2018, only 15% of companies on the Forbes Global 2000 list outsourced from a single supplier, compared to 42% in 2008. As a result, competition in the service provider environment is increasingly aggressive, especially against new players offering relevant and unique outsourcing solutions, including XaaS services. Customers are increasingly turning to niche players who are creative in their decisions, particularly in SaaS and PaaS. In addition, suppliers need to first gain the trust of the client, just offering the service is not enough.
XaaS models change many of the parameters established by traditional outsourcing, especially in the field of service differentiation. For example, thanks to cloud technologies, it became possible to distribute extensive ready-made application services provided as PaaS. They automate many processes, simplify services by forcing standardization, and reduce costs.
Bad reputation
Widespread media coverage of the problems of outsourcers such as Carillion, Interserve and Capita has contributed to negative perceptions of the industry. Large IT outsourcing companies operate on a serious scale, so any, even minor mistakes can put the business at risk. Experts believe that many companies are focused on earnings and do not create long-term partnerships.
Given the mistakes of large outsourcing companies, their clients are trying not only to meet the needs of the business in the near future, but also to cover the full range of possible failures by contract. Experts offer companies to move from a simplified outsourcing system at the daily rate, which can create an adversarial relationship between the client and the supplier, to an approach based on results. This will allow the client and outsourcing company to work together to achieve a common goal and open the way for small innovative companies that cannot yet work with larger enterprises.
Appropriate application
IT outsourcing has long adapted to new technologies and competing services. However, there are a number of situations where XaaS services are more suitable for firms than traditional outsourcing models.
Thus, XaaS is ideal for interchangeable services. Hosting services are the most obvious examples, but XaaS can be used wherever standard services are provided, whether it is a database in the form of PaaS (platform as a service), standard software in the form of SaaS (software as a service) or business processes provided as BPaaS (business process as a service).
At a time of huge labor shortages, it is important to automate simple tasks so that skilled employees can focus on more complex and value-oriented issues. So, SaaS providers are responsible for updates, fixes and security, removing these tasks from the client. In areas such as marketing, this makes a huge difference as core staff do not have the knowledge and skills to do such supporting work.
Traditional forms of outsourcing are transformed by XaaS cloud models and allow even small enterprises to use once expensive applications, including enterprise resource planning (ERP) and customer management. And this paves the way for even the smallest companies to use innovation.[1]
2018
Forrester Global Tech Industry Wheel
2015
EMEA Market
On August 5, 2015, the analytical consulting and company Information Services Group (ISG) published the results of a study of the outsourcing market in the region in the EMEA second quarter and first half of the year.
According to ISG estimates for April-June 2015, the size of the outsourcing market in Europe, the Middle East and Africa grew by 23% on an annualized basis, reaching 2.2 billion euros. This is the total cost of 169 outsourcing contracts concluded in the region. This number of transactions is a record for the quarter, in the second quarter of 2014 there were more than a third fewer, experts say.
Despite strong three-month results, in the first half of 2015, the EMEA outsourcing market lagged behind the indicators of one year ago by 12% in monetary terms due to weak first calendar months. In January-June 2015, the number of transactions amounted to 293 against 322 a year earlier.
In their study, analysts noted a downward trend in average outsourcing order sizes. So, in the second quarter of 2015, only two transactions worth from 80 million euros were concluded. In the first half of the pre-crisis 2008, 199 outsourcing transactions generated revenues of 5.7 billion euros, and seven years later 293 contracts provided a combined financial indicator of 4.1 billion euros, notes John Keppel, President of the North European ISG Office.
It also follows from the report that according to the results of the first six months of 2015, the volume of the business process outsourcing market in EMEA remained at the level of the previous year and amounted to 900 million euros. The value of contracts in the field of IT outsourcing decreased by a quarter to 3.2 billion euros, while in previous years this segment showed a semi-annual volume of 4.3 billion euros.
Analysts call the most attractive outsourcing market British, which in the second quarter of 2015 increased by 150% in money. In Eastern Europe, there has been a slight increase in both monetary terms and the number of contracts, but this subregion is characterized by small sales of outsourcing services by the standards of the entire EMEA.[2]
Fight over giant contracts between Hindus and Americans
On August 31, 2015, it became known that large IT outsourcers representing India and the United States were preparing to enter the fight for contracts worth billions of dollars.
According to experts from ISG (Integrated Services Group), which specializes in industrial outsourcing, consulting, business process reform and integrated integration, several large outsourcing agreements expire in 2016. At least six transactions are valued at more than $1 billion. Among the customers are the American retailer Gap and the British telecommunications corporation Vodafone.
In addition, in 2016, nine contracts for the provision of outsourcing services worth from $500 million will be completed. In particular, the multinational metallurgical company ArcelorMittal and the manufacturer of defense solutions BAE Systems participate in them. Experts do not specify the names of the order performers.
It is only known that IBM is cooperating with Vodafone, and their $1 billion IT contract expires in 2016. At least four months before the onset of this year, companies began to conduct preliminary negotiations on the extension of the contract, reports The Economic Times, citing senior employees directly related to the deal.
"Everyyear the number of terminated contracts increases, which is the result of certain market trends. We see a rapidly growing number of outsourcing deals over time. At the same time, the average duration of agreements has decreased. Hence the increase in the pace of expiration of contracts, "said Dinesh Goel, partner and head of the Indian office of ISG.
According to analysts on August 31, 2015, in the next 36 months, the duration of outsourcing transactions with a total value of $250 billion will end. While U.S. giants IBM and HP are likely to maintain partnerships with existing customers, Indian rivals continue to actively grow their market share.
According to ISG data for the first half of 2015, companies from India control 27.1% of the global outsourcing market, against 23.6% a year earlier. They were able to strengthen their position due to the failures of European competitors such as Capgemini and Atos, experts say.
Indian IT firms such as Tata Consultancy Services and Infosys are targeting large contracts and using better customer pricing to attract customers, as well as offering them to work without large upfront payments.[3]
2014
Global market
On May 19, 2015, the analytical company International Data Corporation (IDC) released some results of its research into the global IT outsourcing market. In their report, experts pointed to the strong positions of Indian vendors.
According to the results of 2014, analysts named the largest provider of IT outsourcing services, IBM whose revenue in this market amounted to $13.8 billion. The top three also included (CGI $2.8 billion) and (Cognizant $2.7 billion). Companies follow Capgemini Wipro with revenues of $2.6 billion and $2.3 billion, respectively.[4]
According to the calculation of specialists, in 2014, in almost one in four (23%) of the world's largest transaction on the provision of services for the transfer of functions related to information technology to a specialized company, a company from India performed.
According to IDC analyst David Tapper, Indian outsourcers have shown their ability to successfully compete with market veterans in the fight for the biggest deals thanks to the following factors: effective use of the offshore business model and new methods of providing services (hosting, cloud services, etc.), active investment in expanding opportunities in areas such as analytics, social networks and mobile technologies, as well as strengthening local strategic resources.
The IDC report also states that in 2014 more than half of the total contract value (TCV) in the IT outsourcing market accounted for the five largest vendors, while a year earlier this share was measured at 43%. At the same time, the average value of the transaction continues to fall due to a decrease in the number of mega-contracts (from $1 billion and more).
EMEA Market
The start of the year for the EMEA outsourcing market was the best since 2010: both the number and volume of concluded contracts in monetary terms in the 1st quarter of 2014 showed double-digit growth compared to the 1st quarter of 2013. This was announced in April 2014 by the American analytical agency Information Services Group (ISG).
According to analysts, the EMEA outsourcing market reached €2.4 billion in the 1st quarter of 2014, an increase of 10% quarter-on-quarter and 29% year-on-year. The number of contracts concluded for services increased by 21% year-on-year, to 165.
These growth indicators were supported by five large - over €80 million - contracts concluded in the 1st quarter, including in the UK, France and the Scandinavian countries, ISG analysts say. The company adds that the EMEA region, which accounts for more than half of global outsourcing activity, continues to dominate the global market.
The largest segment of this service market in EMEA remains IT outsourcing: in the reporting period it accounted for about €2 billion of the total market volume. Quarterly growth was 18% and year-on-year growth was 33%.
Analysts note that in the 1 quarter of 2014, EMEA signed 127 contracts for IT outsourcing services, which became the highest indicator in the region ever recorded in the quarter.
The top 10 IT outsourcing service providers in EMEA, according to ISG analysts, are BT , Carillion, Cognizant, CSC, EVRY, HP , IBM, iGATE, Orange and Quindell.
It is worth noting that the segment in which the third quarter in a row is experiencing a decline is called business process outsourcing in ISG .
Among the countries where outsourcing showed the most confident growth, analysts call the UK: contracts worth over €1 billion were concluded here, quarterly growth was 33%, and annual growth was 66%. The recorded number of concluded contracts - 59 - turned out to be the highest quarterly result over the past three years, the ISG notes.
France turned out to be the second largest market in EMEA with a volume of about €330 million, showing an impressive jump: the market volume grew by almost 300% quarter-on-quarter.
In Germany, on the contrary, there was a slight failure in the value of contracts for outsourcing services, while the number of contracts themselves increased by 21% in the quarter and by 52% year-on-year, compared to the weaker than usual dynamics of the 1st quarter of 2013, ISG analysts say.
The countries of Eastern Europe and Russia, according to ISG, remain the smallest outsourcing market in the EMEA region: its volume in the 1 quarter of 2014 was estimated by analysts at €0.03 billion.
KPMG data
In May 2015, KPMG summed up the results of the IT outsourcing market in the world in 2014. The average value of the contract (TCV, total contract value) in the field of IT outsourcing in the world has grown from $95 million in 2012 to $99 million in 2013, and amounted to $105 million in 2014.
In total, in 2014, 889 IT outsourcing contracts were concluded in the amount of $86.7 billion and 189 business process outsourcing contracts for $23.7 billion. Another 66 contracts worth $9.9 billion implied simultaneously IT outsourcing and outsourcing of business processes (such contracts were concluded in 24% of cases by military departments and in 26% of cases by government organizations).
Thus, in 2014, contracts totaling $120.4 billion were concluded in the field of IT outsourcing and outsourcing of business processes in the world.
The average duration of the concluded contract will be 4 years and 4 months, which is noticeably less than the indicator of previous years. At the same time, in 20.5% of cases, the contract is concluded for a period of more than five years, and only in 10.2% of cases for less than a year.
In terms of regional characteristics, in the Americas, South and Central America, the number and total value of outsourcing contracts awarded decreased compared to 2013. The same pattern was observed in the Asia-Pacific region and in Oceania. But in the EMEA region there was an increase.
2013
Global market
According to the forecasts of Gartner[5] dated July 2013, the global IT outsourcing market in 2013 will reach $288 billion, which is 2.8% more than 2012 in dollar terms and 5.1% - in constant currency. Interestingly, compared to Gartner's earlier forecasts, all segments of this market will slightly slow their growth.
As Gartner experts emphasize, however, plans to adapt the IT outsourcing model in all segments of this market remain positive. At the same time, large enterprises tend to use hybrid IT strategies, and medium and small businesses prefer IaaS, which is a key driver in the segment of cloud services and services related to data centers.
One of the fastest growing segments of the global IT outsourcing market until 2017 will be the segment of services related to the phenomenon such as bring your own device (BYOD), that is, the use of corporate employees of their own portable computer devices for work purposes.
In the Asia-Pacific region, Latin America and China, the IT outsourcing market will grow fastest: by about 13% in 2013 and 2014. The growth of the market here is due to the rapid development of the local economy, the emergence of new customers, as well as the expansion of multinational companies. In North America, the market will also grow in the future until 2016. Currency fluctuations will continue to be a significant factor in the analysis of market growth in the single currency.
India Market
The provision of autorcing services by Indian companies in other countries will grow from 12% to 14% in the financial year, which will begin on April 1, 2013, as demand for such services is slowly growing. The largest Indian outsourcing companies include Tata Consultancy Services and Infosys: in the fourth quarter of the previous financial year, they showed both revenue and profit gains.
The National India Association of Software and Services Companies (Nasscomhttp [6]) predicts that exports ON of services will range from $84 billion to $87 billion from March 2012 to April 2014. In the 2012-2013 fiscal year, this figure is projected to be $75.8 billion, which corresponds to an annual growth of 10.2%.
Analysts expect a strengthening of India's outsourcing industry, which for several previous quarters has been negatively affected by the decline in the IT budgets of companies in the United States and Europe, which are the main customers.
The offshore outsourcing market will grow by 12-15% this year, analysts at Offshore Insights predict. However, which is unpleasant news for the industry, more and more customers are abandoning the traditional pricing model, when the price of services is calculated based on the number of specialists involved in the project, in favor of alternative ones.
In addition, more customers prefer their service providers to be located as close as possible to key markets in the United States and Europe, Ashok Vemuri, Infosys vice president in America, recently said.
2012
Global market
According to Gartner's forecast, global spending on IT outsourcing services (ITO) will reach $251.7 billion in 2012, up 2.1% from 2011 ($246.6 billion).
The fastest growing segment of the ITO market is cloud computing services, which form part of the cloud infrastructure-as-a-service (IaaS) segment. Cloud computing spending is expected to rise 48.7% to $5.0 billion in 2012, compared to $3.4 billion in 2011.
"Today, cloud computing services mainly automate basic functions. As next-generation business applications enter the market and existing applications are transformed to use automated operations and monitoring, there will be greater value in terms of interoperability of services, mobility and reduction of [required] personnel, writes Gregor Petrie, director of research at Gartner. "However, remaining concerns in terms of privacy and regulatory compliance could negatively impact growth in some regions, especially if providers are slow to bring localized solutions to market."
The mature data center outsourcing (DCO) segment accounted for 34.5% of the entire IT outsourcing market in 2011, but growth here will decrease by 1% in 2012. "The data center outsourcing market has come close to a major turning point, and various data center processing systems will be gradually replaced by new delivery models through 2016. These new services allow providers to reach new customer categories by expanding DCO's [service offering] from traditional, large organizations to small and medium-sized companies, "writes Brian Breetz, director of research at Gartner.
It is expected that spending in the application outsourcing (AO) segment will reach $40.7 billion, which is 2% higher than in 2011 ($39.9 billion).
This growth reflects the need for organizations to manage the vast legacy application environment and commercial, off-the-shelf software packages that serve the business.
"There isa change in the app outsourcing market. The burden of managing an inherited portfolio, along with limited IT budgets, is pushing corporate customers to be more cautious about electing an evolutionary transition to other application services like SaaS, Britz writes. - New applications will be mostly ready-made packages and/or built on the basis of SaaS to expand and modernize the portfolio gradually. And while custom applications will remain the "core" for many organizations, the trend towards SaaS in the cloud over the next few years will be reflected in the growing prospects for outsourcing applications. "
Gartner expects that the continued downturn in business activity due to the debt crisis in Europe and the slowdown in exports to China will have some impact, but the emerging IT outsourcing market in the Asia-Pacific region will show the highest growth in the world.
In 2012, IT outsourcing costs in Asia and the Pacific will increase by 1% (in US $ USA), and in 2013 growth will exceed 2.5%. With the exception of Japan, Australia, New Zealand and, to a lesser extent, Singapore and Hong Kong, the countries of this region remain almost intact in terms of using outsourcing and understanding all its aspects. Growth has been driven by large inflows of capital to Asia over the past three to five years, and global and regional companies need to expand their operations here.
In North America, Gartner expects customers to seek to transfer more IT features to monthly service contracts to recover costs and IT costs. This will support the growth of IT outsourcing through 2016. The unwillingness of organizations to hire and make large investments, as well as the desire to follow the strategy of "lightweight" IT resources, continue to push customers to use services provided from outside.
The economic difficulties that worsened at the end of 2011 continue to affect public policy and the mood of end users in many key European countries, so Gartner predicts a 1.9% decrease in IT outsourcing growth in Western Europe (in US dollars). United States) during 2012. The newly increased economic pressure is hampering the desire of many commercial organizations to take aim at increasing competitiveness, rather than reducing costs. In addition, the public sector of European countries will remain cautious in allocating budgets throughout 2012. This will force many central and local authorities to focus on various outsourcing options aimed at reducing IT costs by improving efficiency and rationalization.
EMEA Market
In 2012 EMEA , there was a decline in the autorcing market in the region, as evidenced by data from Information Services Group (ISG)[7]Nevertheless, analysts recorded positive dynamics in the market, and outsourcing business processes among the countries of the region, the UK accounted for the most healthy growth.
According to the ISG study, which analyzed commercial outsourcing contracts with an annual contract value (ACV) of 4 million euros, in the fourth quarter of 2012 the total volume of such transactions reached 2.1 billion euros. Compared to the third quarter of 2012, the volume of transactions decreased by 6%, and compared to the fourth quarter of 2011 - by 29%.
In total, in 2012, the volume of outsourcing contracts in the EMEA region in total amounted to 8.2 billion euros, which is 12% less than in 2011. In total, 434 contracts were concluded for the year (-21% of the 2011 indicator).
According to John Keppel, President of ISG, the results of 2012 must be considered in a historical context, because since 2007 EMEA has almost doubled the number of outsourcing contracts concluded annually.
The largest regional outsourcing market in Europe is the UK market, where the annual volume of contracts increased by 20% in 2012 to 3.7 billion euros. Financial companies are active consumers of autorcing services here. And although the number of contracts has slightly decreased here compared to 2011, in general, activity in the local market remains very high, experts say.
The second largest regional market in Europe is Germany, where the total volume of contracts for 2012 reached 1.6 billion euros, which is 23% less in annual comparison. In France, after the previous record year, the total volume of transactions in 2012 fell by 63% to 380 million euros, while the number of transactions concluded decreased by 37%.
As for the market segment, IT outsourcing is in a less favorable position: the number of contracts of this kind in 2012 in EMEA decreased, and the volume of transactions turned out to be the smallest in the last 5 years and amounted to 5.1 billion euros. However, since the onset of the post-crisis recession, the business process approval (BPO) segment, on the contrary, has been going uphill: the volume of contracts in 2012 increased by 35% to 3.1 billion euros.
2011
The volume of the global IT outsourcing market reached $246.6 billion in 2011, which is 7.8% higher than in 2010, according to Gartner. The maximum growth rate in 2011 was shown by the service providers of India, as well as providers associated with the cloud business.
Among the players, IBM retained the number 1 position, the company's revenue from the outsourcing direction increased by 7.8%, which amounted to 10.9% of the total market volume ($26.9 billion). In second place in terms of revenue - HP: this is $15.1 billion, growth by 2010 - 2%. Fujitsu is in third place with $10.98 billion and an increase of 10.3% by 2010. In fourth and fifth place are CSC and Accenture with $10.37 billion and $6.5 billion in revenue.
Top 5 global IT outsourcing providers by revenue for 2011 ($ million)
Source: Gartner (May 2012)
However, the market remains quite fragmented. Other providers accounted for most of the market - $176.64 billion. Moreover, 43 providers in the framework of the study in 2011 showed revenue of $1 billion or more. Profit growth within this group was 9.5% in 2011. With the exception of Indian service companies, cloud service providers and those who have made significant acquisitions over the past year, the average business growth of the largest IT outsourcing providers was 6.5% in 2011.
2010
The global IT services market outsourcing reached $144 billion in 2010, a record since 2003. According to analysts, Ovum the largest contribution to this result was made by the IV quarter, in which several super-large contracts were signed. The most high-profile of them was the contract for the supply of equipment worth $2.5 billion, signed between NASA and. HP Despite the high final result, in the first three quarters of 2010, the total amount of contracts signed was $96 billion, and the annual result could well be the lowest since 2005. For many experts, the conclusion of large contracts came as a surprise. At the moment, it is not yet clear whether such deals can be considered a trend. It has been repeatedly suggested that the days of large-scale investment are over. In addition, analysts note that the takeover of the IT Siemens Solutions and Services division by the French company Atos Origin gave a noticeable dynamics to the market.[5]
See also
- IT outsourcing
- IT outsourcing (Russian market)
- Accounting functions outsourcing: accounting, payroll and personnel accounting (Russian market)
Notes
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