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Technology / AI and automation

Worldwide IT outsourcing market to reach $288bn in 2013

Worldwide IT outsourcing (ITO) market is expected to reach $288bn in 2013, a 2.8% rise in US dollars and 5.1% in constant currency compared to revenue generated in 2012, according to a report from Gartner.

The report said that the ITO markets in Asia Pacific, Latin America and Greater China are expected to grow over 13% in 2013 and 2014.

Expansion of the multinational companies is expected to drive the growth in the regions and increase new buyers of ITO and favourable economic conditions.

Gartner research VP Bryan Britz said that the overall market growth is being constrained by near-term market factors such as evolving ITO delivery models, economic, political and labour conditions, and service provider financial performance.

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"Mature Asia/Pacific and Western Europe are the regions where the outlook is most tempered, partly due to currency but also reflective of our view that 2013 is likely to be similar to 2012 in these regions," Britz said.

"Planned new adoption of ITO remains positive in all service line segments. However, constrained IT budgets, an evolving ITO delivery model, economic conditions and cost-focused buyers are limiting the growth potential of the ITO market."

"Enterprise buyers pursuing hybrid IT strategies and small and midsize business buyers adopting infrastructure as a service (IaaS) are key drivers in cloud and data centre service segment growth rates.

"The global market size for data centre outsourcing is in gradual decline due to workloads moving to IaaS and to IUS exceeding the net-new adoption of data centre outsourcing."

The report revealed that the outsourced support for mobile end user devices is expected to experience a strong growth through 2017, due to increased enterprise adoption of mobile, tablet and handheld devices.

Desktop outsourcing is expected to face a gradual drop, but it could have witnessed a sharper decline had it not seen growth in Latin America, emerging Asia Pacific and Greater China.

In North America, the ITO market is expected to grow through 2016 as the buyers are expected to opt for more IT transition work to annuity-managed service relationships for cost takeout and more predictability in IT costs.

"Historically, ‘run the business’ costs have been less impacted by economic challenges than has discretionary spending on new projects," added Britz.

"Nevertheless, increased client adoption of pricing models that create volume variability is causing the ITO market to exhibit more cyclical patterns.

"This shift will continue as clients seek to reduce the nearly two-thirds of IT budgets devoted to operations, while shifting the expense from capital expenditure to operating expenditure through the consumption of ITO service lines."
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CBR Staff Writer

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