Is the dirty end of IT outsourcing where the money is?

Back in the day all IT services firms were talking about the importance of increasing margins by offering services on top of services. Many years ago when I worked in the IT channel press everybody was talking about how hardware was dead and no one could make money out of it.

But according to Sean Finnan, former head of EDS in the UK and more recently director of European IT services at IBM Global services it is the old fashion datacentre space where the money is today. Not even hardware just datacenter space.

This he says is the result of all the cheap finance that has been available lately. Businesses have borrowed money on low interest rates and build and kit out datacentres. They then rent it out for years to come.

And there is certainly demand for datacenter space with companies of all sizes requiring the more and more datacenter space. There are also an increasing number of cloud suppliers that need somewhere to host their software and make it available to customers.
Finnan who is now partner of an independent consulting company which focuses on IT outsourcing among other things, told me about the change.

“The value add bit is still important but the so called ‘dirty end of the business’ of running the datacentre is having a renaissance,” said Finnan.

“Cheap credit has been used to drive extensive datacenter builds. This is not even hardware but space.”

Finnan said that businesses are building datacentres on the doorstep of particular types of companies, such as retail and financial services hubs.