Gartner said at its Outsourcing and IT Summit today that 2010 marks the beginning of a new era in outsourcing. They talked about how outsourcing has already seen massive upheaval and is about to be shaken to its core again.
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The next phase (number 3 below) will see industrialised IT delivered for up to 80% less cost and IT departments focus on doing things that are more strategic .
Ok here goes.
1 – Traditional outsourcing: 30 years ago IT began to be outsourced. Suppliers said we will take your costs and reduce it by a further 20%. This has created a $280bn industry.
2 – Offshoring: Then we had the emergence of offshoring. This was in the late 90s. This was IT outsourcing that took the customer costs and knocked 30% of. In ten years it has created a $70bn industry.
3 – Industrialisation: But now we have a scenario where the suppliers can take the customers’ costs and take off another 60% to 80%. This is through one to many standardised services. This creation of low cost IT services will create a $150bn industry over the next 5 years.
One of the key messages from Gartner on this new era was: “Be ready for low cost IT and to increase the contribution IT makes to the business.”
This comes from an interesting study Gartner did with CEOs of big companies about the future role of IT.
88% of CEOs expect IT’s strategic contribution to increase.
10% don’t think it will change.
2% think it will decrease.
I wonder who the 2% were?
“If 88% of CEOs want to increase business value contibution you do not want to make them unhappy,” Gartner warned CIOs.
See the other posts from the Gartner event so far: