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August 07, 2012

Worldwide IT Outsourcing Services Spending Continues to Rise, Says Gartner

Worldwide spending for IT outsourcing (ITO) services continues to grow and is expected to reach $251.7 billion in 2012, a 2.1 percent increase from 2011 spending of $246.6 billion, according to the latest outlook by Gartner (News - Alert), Inc.

Gartner’s study reveals that cloud computing services are the fastest-growing segment within the ITO market, which is part of the cloud-based infrastructure as a service (IaaS) segment. The study shows that cloud computing services are expected to grow 48.7 percent in 2012 to $5.0 billion, up from $3.4 billion in 2011.

In a statement, said Gregor Petri, research director at Gartner, "Today, cloud compute services primarily provide automation of basic functions. As next-generation business applications come to market and existing applications are migrated to use automated operations and monitoring, increased value in terms of service consistency, agility and personnel reduction will be delivered." He further added, "Continued privacy and compliance concerns may however negatively impact growth in some regions, especially if providers are slow in bringing localized solutions to market."

However, the data center outsourcing (DCO), which is a mature segment of the ITO market, is on the decline. Gartner study indicates that DCO, which was about 34.5 percent of the ITO market in 2011, growth will decline one percent in 2012. Gartner research director Bryan Britz thinks that the DCO market is at a major tipping point, where various data center processing systems will gradually be replaced by new delivery models through 2016. “These new services enable providers to address new categories of clients, extending DCO from traditional large organizations into small or midsize businesses," noted the research director.

Likewise, according to Gartner, the application outsourcing (AO) segment is expected to reach $40.7 billion, a 2 percent increase from 2011 spending of $39.9 billion. According to the market watcher, this growth reflects enterprises' needs to manage extensive legacy application environments and their commercial off-the-shelf packages that run the business.

Despite sovereign-debt issues in Europe and slowing exports in China, Gartner expects the ITO market in the emerging Asia/Pacific region to represent the highest growth of all regions.

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Edited by Amanda Ciccatelli
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