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February 26, 2013

Market consolidation to displace up to 20% of top IT service providers by 2014: report

The long-established IO providers are expected to be at a risk of becoming extinct

By CBR Staff Writer

Market consolidation is expected to displace about 20% of the top 100 IT services providers, according to a new report from Gartner.

According to the ‘Market Insight: The Five Regrets of the Dying Infrastructure Outsourcing Service Provider’ report, in the past five years, the infrastructure outsourcing (IO) market has witnessed a tough market environment with limited growth in most of the regions.

According to Gartner research vice president Gianluca Tramacere the long-established IO providers are expected to be at a risk of becoming extinct.

The report revealed that the traditional IO approaches have beet not able to provide continuous cost reductions to clients or operational efficiencies to service providers and the model has not been generating the expected financial returns.

Additionally, the report has identified five outsourcers’ regrets, which led to their own complacency or lack of ability to act appropriately.

Major regrets of outsourcers include their failure to build, validate and implement a long-term strategy and rationalising the portfolio and adoption of service life-cycle management processes.

Traditional infrastructure outsourcers are expected to no longer survive as per their current state as the market would not allow it over raining demands from customers.

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The report stressed that CIOs and IT leaders have to take instant action, while the failed not be able to survive for long-term in the market and are expected to disappear through a merger, acquisition of divesture.

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