Outsourcing to go on tap

IT outsourcing services will become commoditised, making them similar to utilities, and resulting in cheaper deals for firms, the UK head of Unisys has predicted. He forecast that offshore IT services will also become more popular.

Brian Hadfield, managing director at the IT services firm in the UK, said the future of outsourcing would see a move to packaged offerings and away from one-off, specialist deals. "We believe the ability to take an outsourcing venture and grow it into a utility is important," he said. "You get economies of scale, which can be passed on to the customer."

Hadfield predicted that demand for outsourcing would grow in a number of areas, including supply chain management, logistics and customer relationship management. "You'll see a transition from outsourcing the back office to the middle and front-end. People will start taking a look at outsourcing these activities."

Hadfield predicted that in order to focus on their core competencies and differentiators, more organisations will begin to offload tasks to outsourcers such as Unisys. "We see particular growth in business process outsourcing," he added.

Hadfield also anticipated growth in offshore IT outsourcing. "We do some offshore work and have made investments in this area," he added. "The ability to lower costs by doing work offshore will be attractive to customers and suppliers." However, firms are likely to be selective about the projects and activities sent abroad, he predicted.

Hadfield acknowledged that offshore providers will have to reassure customers about security and the quality of the end product, but argued that when offshore projects run into difficulties it is not always the fault of the service providers. "It might be that the activity was the wrong choice for offshoring," he argued.

IT services provider Wipro agreed with Unisys that there is growing interest in offshoring. Its recent research suggests that almost a third of firms are planning to offshore IT infrastructure during the next year, and the same proportion are researching the possibility.

Application maintenance came top of the list, with more than two thirds of companies planning to move this activity offshore in the coming year. And 34 percent plan to offshore some of their business processes within the same timeframe.

Spending on offshoring is set to grow. Almost 90 percent said their organisations would increase their expenditure this year, by an average of 34 percent.

The results indicate that offshoring has entered the mainstream, according to Sudip Banerjee, president of Wipro's enterprise solutions division. "There is a clear indication that various global organisations have gained confidence to offshore new and complex service lines like IT infrastructure management and critical business processes," Banerjee commented.

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