Information technology outsourcing (ITO) services market is expected to reach $313.2bn in 2011, a growth of 6.9% from 2010, and will reach 4.6% compound annual growth rate through 2015, according to an online survey by Gartner.
The survey revealed that 62% of respondents identified growth as the top strategic goal this year, with aggressive marketing plans and investments in cloud, utility and "as a service" offerings.
Gartner vice president and distinguished analyst Rolf Jester said it is clear that providers are optimistic despite considerable uncertainty in the global economies.
The survey found that at least 50% of outsourcing providers said they will be spending 2 to 5% of revenue on marketing in 2011, which is higher than the historical norm for marketing expenditure as a percent of revenue (which has tended to be 1% to 3% for IT services providers).
Gartner research director Bryan Britz said at the same time, ITO providers continue to invest significantly more in sales than marketing as demonstrated by two-thirds of providers indicating sales expenses are greater than 6 percent of revenue.
As ITO providers will prioritise the pursuit of new clients, 45% of all ITO providers indicated that winning new clients is the top priority for 2011.
They also recognise the fact that the bulk of this year’s actual revenue growth will continue to come from existing accounts, with overall, between 66% and 70% of expected growth in 2011 will be generated by existing clients.
The survey found that between 60 and 64% of providers nominated cloud investments in the top three ITO investment priorities for 2011.
The average percentage of deals expected to include cloud services and utility services or "as a service" delivery models is 18% for data centre deals in 2011, growing to 24% in 2012.
Only 34% of respondents said that their data centre ITO deals will incorporate cloud/utility/as-a-service by 2015, but 26% don’t believe they will be involved in any of these deals.
For cloud-based services, 56% of ITO providers expect these alternative delivery models will drive overall ITO revenue growth by 2015, while 29% believe it will essentially cannibalise some ITO revenue.
Gartner vice president Allie Young said providers that ignore those trends could find themselves stuck with yesterday’s delivery models and high cost structures as the market moves on around them.
The Gartner online survey was conducted in the first quarter of 2011 and included 47 ITO providers, accounting for 62% of the total ITO market.
