IT outsourcing market is massive and getting bigger

Nasscom said the IT-BPO industry will be worth almost $50bn in the first quarter of 2010.

I would like to see a breakdown of this number. How much is outsourcing to cut costs and how much is strategic?

I would also like some views about how cloud computing will impact both IT outsourcing and BPO?

NASSCOM CEO Pramod Bhasin is quoted as saying: “The industry has reinvented itself by increasing its cost efficiencies, utilisation rates, diversification into new verticals and markets and new business and pricing models.”

This is interesting because from my meetings with the Indian suppliers they do appear to be flexible and reactive to changes in the markets.

Bhasin went on and said there will be increased focus on higher end offerings such as system integration, consulting, business intelligence, knowledge services and vertical specific BPO services.

This could suggest that most of outsourcing contracts now are to cut costs.

But will it be to cut costs or will it be strategic outsourcing?

TPI also revealed figures that painted a nice picture of the IT outsourcing market.

EMEA businesses spent a massive E12.4bn on outsourcing over the past three months, with the sector recording a 135% quarter-on-quarter increase, according to TPI. The total value was also 61% higher than the same period a year ago.

But what does the industry think?