Firms seek protection of outsourcing heavyweights

Downturn sees companies turn to the big players - which spells trouble for smaller and niche IT services firms, says research

Outsourcing trends point to fewer suppliers

UK firms are turning to the heavyweights of the outsourcing industry during the current recession and spurning smaller, niche suppliers, according to research.

In a new report, analyst Ovum says the 10 largest outsourcing suppliers in the UK boosted their total contract value by 31 per cent in the first six months of 2009.

"Demand is holding up well as outsourcing becomes a top priority for many users grappling with the impact of recession," said John O'Brien, senior analyst at Ovum.

O'Brien highlighted big deals from companies such as Virgin Atlantic, Carphone Warehouse and Northern Rock as proof of the robust demand for outsourcing services.

Ovum's report suggests providers that can offer new technologies such as virtualisation and cloud computing, along with other innovations geared at reducing operational costs, will win most business. And to do that requires deep pockets.

"Without a clear understanding of, and a strategic response to, the challenges faced, this has the potential to spell the end for the second- and third-tier UK IT outsourcing market," the report says.