Outsourcing dodges economic slowdown during 2000

Analysts and vendors alike are predicting another boom year for outsourcing, as more companies look to achieve flexibility and efficiency through outsourcing.

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By  Greg Wilson Published  June 17, 2001

Outsourcing looks like it’s going to dodge the economic slowdown, say analysts and vendors. According to Unisys CEO, Lawrence Weinbach, the vendor is expecting double digit growth in the coming quarters.

Weinbach’s summary of the situation concurs with recently released figures from research body IDC, which illustrated outsourcings relentless climb. During 2000 some of the biggest ever outsourcing deals were signed — one deal totalled $7.5 billion.

The research house reported 50% increase in the number of ‘mega-deals,’ worth over $1 billion, to 17% of the total market.

“Companies from diverse regions will need greater assistance in managing IT and business functions to remain competitive,” says Cynthia Doyle, IDC program manager for outsourcing.

Locally, however, there still appears to be a strong reluctance to sign up for outsourcing projects, with few of the region’s organisations embracing the outsourcing model. Only Gulf Air and Saudi Telecommunications Company (STC) have outsourced services over recent years.

But says Stratos Sarissamlis, vice president international, service management strategies, Meta Group, more IT organisations must come to terms with the outsourcing model.

“Up to three years ago outsourcing was a disease that you wouldn’t like to catch — it was an indication of flawed IT management,” says Sarissamlis.

However, with more IT/business decisions moving towards the line of business managers, outsourcing is being seen as a strategic move to achieve speed, flexibility, cost efficiency, service quality and in some cases competitive edge.

Consequently, says Sarissamlis, “IT organisations have to come to terms with outsourcing — if they delay the operation somebody else is going to take the decision for them and it’s going to be based on their different terms.”

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