UK firms more likely to outsource during recession

04 Feb 2009 View Comments
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Indian IT services
Nearly 90 per cent of large firms use Indian IT providers

Large UK organisations are more likely to turn to outsourcing as a way to save money during the recession, according to research by consultancy EquaTerra.

The study of senior managers at 125 of the top IT spending organisations in the UK suggested that 63 per cent are looking to outsource more, compared to 54 per cent the previous year.

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Some 80 per cent of survey respondents said that further cost savings was the main reason for increasing their levels of outsourcing.

Nearly nine out of 10 organisations (89 per cent) said they use Indian IT services firms to meet some of their needs, and 66 per cent are using a combination of near- and offshore outsourcing as part of their strategy – compared to 57 per cent the year before.

"These results clearly demonstrate that service providers with existing IT outsourcing contracts are unable to rest on their laurels," said EquaTerra European chief operating officer Phil Morris.

"As price becomes a more immediately pressing attribute than satisfaction, clients will seek opportunities to consolidate their IT service provider portfolio in an effort to gain economies of scale and drastically reduce spend levels."

However, the findings are at odds with separate research published last month by consultancy TPI that showed a 50 per cent fall in the value of outsourcing contracts in the second half of 2008 – even though last year was still a record year in Europe for the number of deals signed.

"The weakness we noted in the third quarter of 2008 continued into the fourth quarter, and looks likely to remain into the first part of 2009," said TPI president Duncan Aitchison at the time.

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