European firms satisfied with IT infrastructure outsourcing but priorities are changing

Although 60% of European businesses are satisfied with their IT infrastructure provider, focus is switching from cost reduction to services that offer business benefits

Although 60% of European businesses are satisfied with IT infrastructure service providers, their focus is switching from cost reduction to services that will help them increase sales and provide a better customer experience.

In a study by Forrester Research, 71% of IT infrastructure service buyers cited revenue growth and improving the customer experience as priorities for deals, while 66% said cost reduction was a focus.

The research revealed there is room for improvement from suppliers to meet these priorities.

Of the 435 Europe-based IT services decision-makers surveyed, 34% said cost savings were lower than expected; 29% said service quality or delivery was inconsistent or poor; 26% said there is a lack of innovation and/or continuous service-level improvements; 23% said there is a lack of flexibility in changing volume, scope, business needs or pricing models; and 22% said service providers lacked a fully developed and functioning global delivery model.

Forrester said Europe’s service providers were under pressure from customers to change service models, and competition from offshore suppliers is forcing them to do it. 

“The infrastructure services supplier landscape includes many different types of supplier, including global, regional and local traditional service providers, Indian outsourcers and emerging suppliers. This is increasing competition and forcing suppliers to bring new offerings and delivery models to the market,” the Forrester report stated.

“Faced with this customer demand for better, faster and more cost-effective infrastructure services, and increased competition from emerging and India-centric suppliers, Europe's leading providers are forced to bring new offerings and delivery models to the market,” said Forrester analyst Wolfgang Benkel. “The good news is some of them are finally listening to their customers.”

Suppliers are adjusting their offerings and increasing their ability to globalise, automate, simplify and continuously improve their infrastructure service provisioning, according to the report, which went on to say they are also focusing on acquiring the right technical and business skills and experience to become more innovative.

Europe’s service providers are under pressure from customers to change service models, and competition from offshore suppliers is forcing them to do it

Forrester Research

Cloud computing is changing contractual models. Forrester said as a result of cloud computing, multi-sourcing is becoming the norm. Customers want flexible services closely aligned to business performance and more choice on pricing models, and more people in businesses are having their say when procuring services.

Forrester said service providers with most of their delivery capability in India – such as Cognizant, HCL, Infosys, Tata Consultancy Services (TCS), Tech Mahindra and Wipro – are aggressively increasing their infrastructure footprint in Europe. It added that smaller India-based suppliers – such as CSS, i-Gate, Mindtree and NIIT – are targeting European customers.

In Europe, suppliers such as BT, Computacenter and Getronics have a string base of mid-sized business customers. Meanwhile, infrastructure-as-a-service (IaaS) suppliers with public cloud offerings, such as Amazon Web Services and Google, have shaken the market.

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