Outsourcing key to beating downturn

Recession begins to bite into IT departments at nearly three quarters of firms

Increased outsourcing, include networking infrastructures, will likely form a key trend for 2009 as companies react to mounting downward  financial pressure caused by the economic downturn.

This trend forms part of a recent report by Forrester Research which has revealed the true extent as to the toll the economic downturn is having on IT departments and their budgets in particular.

Forrester says that as a result of the downturn, 43% of firms have already increased their use of infrastructure outsourcing. A similar number said that they would move more work offshore. Infrastructure outsourcing expects to grow with convergent telecommunications and network management likely to be a hot area of growth as 20% of firms outsourcing this service in 2008.

From the research, few firms have fully tapped into offshore resources, with just less than a tenth of firms currently using offshore resources wherever and whenever possible. Given a need to cut costs, 14% of firms confirmed they will increase their usage of offshored services with a fifth actively piloting offshored services.  Even though 22% of firms are not using currently offshored service, they are actively tracking developments.

However, the survey also revealed that firms were aware of the downsides of offshoring. Of those firms not sending work offshore, a majority cited the questionable quality of the work done and .even though firms using a third party  were overall satisfied with their decision to, 52% said that their biggest challenge with existing IT services and outsourcing relationships was that cost savings were  lower than expected.

In a sharp reminder to the vendor community, other stand-out challenges included inconsistent or poor service quality (40%) and the inability of the vendor or contract structure to respond rapidly to changing business needs (35%).

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