IT outsourcing will grow into a $100 billion industry by the year 2000, but fewer than 10 suppliers worldwide have the capacity to provide a full suite of services to large corporates.
According to a report from Business Intelligence, the range of IT activities being outsourced is rapidly expanding, but fewer organisations opt for total deals. Instead, they tend to hire several specialised outsourcing firms.
Wendy Currie, co-author and professor of the school of management at Sheffield University, said: ?I think suppliers may have to develop a range of skills and they may choose to specialise. The real problem with outsourcing is that it?s not just PCs but a whole gamut of things - companies may need to use a network of suppliers. In the future we are likely to see lots and lots of small suppliers offering different services.?
The survey also found that organisations with existing outsourcing contracts are increasingly looking towards ?value added? outsourcing and smarter contracting.
?The idea of value added outsourcing is an important one. The more you outsource to a company, the more you have to look to the company," said the report. "If you?re a client you want your IT supplier to offer value added services. The portfolio of services on offer is widening."
The report said the main reason for corporations choosing to outsource is the freedom to focus on other core activities.
But the benefits can be lost if a poor contract is negoiated. In the past, many companies found themselves tied to outsourcing contracts they were not happy with.
?Contracts may be a bit loose or they may be a bit tight. It?s important to develop a partnership where both companies work together, rather than a sort of straight, commercial relationship. It?s nice to have a straight, ongoing relationship.? said Currie.
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