Economic climate fuels outsourcing growth

3 December 2010

3 December 2010 | Lindsay Clark

The economic climate continues to increase demand for IT outsourcing in the UK, research shows.

A study of more than 650 outsourcing contracts, held by over 220 of the top IT spending organisations in the UK, found 61 per cent would ‘probably’ or ‘certainly’ outsource more.

Research firm EquaTerra discovered demand was fuelled by buyers’ need to respond tactically to recessionary economic conditions by cutting current operating costs. It is also driven strategically by ongoing shifts in preference for how core IT services are delivered in organisations.

Global sourcing of IT services is a dominant element in UK organisations’ sourcing strategies with 75 per cent of the respondents using offshore IT suppliers. India remains by far the most dominant offshore IT outsourcing destination.

This was reflected by the vendors who proved most popular. UK IT outsourcing buyer organisations ranked Wipro (80 per cent), Mahindra Satyam (78 per cent), both in India, and Cognizant (77 per cent), which is based in the US but has operations in India, as the top-three performing service providers for client satisfaction in EquaTerra’s 2010 UK IT Service Provider Performance Study.

Lee Ayling, an EquaTerra managing director, said that despite the economic drive to outsource, cash reduction was not the only motivation. “Outsourcing contracts which deliver cost savings alone do not lead to higher client satisfaction. But successfully delivering cost savings plus another driver, such as access to skills or time to market, does positively impact general satisfaction – highlighting that both [buyers] and service providers should not focus on price alone before and during an outsourcing relationship.”

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