|
 The Great ITO Shakeout: How Cloud, Competition and a Maturing Market are Transforming ITO
By Patti Putnicki, Business Writer, Outsourcing-Center
In the world of IT, Cloud has been the media darling, taking center stage in every conversation and publication. While it's true that Cloud is a major trend in and of itself, its adoption has caused a domino effect in the industry as a whole. The advent of utility-based pricing, in combination with a more savvy outsourcing customer, is dramatically impacting the way IT services are purchased and consumed – with far-reaching ramifications.
Let's take a look at the trends.
In recent years, ITO was a "partnership," characterized by long-term, mega-deals with arduous sales cycles and complex pricing structures. Smaller companies rarely had the breadth to compete. Today, all of that is changing.
"We see ITO morphing into something that's more fragmented, " explained Ben Trowbridge, founder and CEO of Alsbridge, Inc. and author of Cloud Sourcing the Corporation. "Instead of the mega-deal, single-provider contracts, clients are starting to break up deals based on competencies. Two, three or more providers will become the norm."
According to Trowbridge, today's outsourcing client is now well-equipped to manage the complexities of governance in a multi-sourced environment.
"You have to remember that clients are maturing in their use of outsourcing, so they're starting to govern the outcome instead of overseeing every tactical step," Trowbridge explains. "This approach makes managing multiple ITO providers far more feasible."
This new breed of client is engaging the advisor community differently as well.
"Buyers are more informed, they've gone through the process – and service standardization has given them price transparency they didn't have before," explained Chris Pattacini, director of benchmarking for ProBenchmark, Alsbridge's benchmarking division. "Rather than coming to us to identify what and how to outsource, clients are engaging us to benchmark existing deals to make sure they're not only getting a good price but are maximizing the value of that relationship."
Although opinions vary on where the market will go or what will happen next, one thing is certain: the world of ITO as we know it today will never be the same. Gone are the days of ‘an IT partner for life;' in are the days of multiple, smaller, shorter contracts with a variety of specialized providers. India-based outsourcers are expanding their service portfolios beyond applications and programming to provide more traditional ITO services at significantly reduced rates. A more mature client base is taking a new approach to governance, managing by outcome and benchmarking to ensure they get the greatest value from their combined service provider partners.
View All Articles »
To access the full article,
Sign In or Subscribe Now
To Subscribe, complete the form below.
|
Top