Enterprise buyers demand a range of services

Enterprise buyers are demanding that IT service providers offer a range of global sourcing alternatives, including on-site, domestic, offshore and nearshore capabilities.

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By  Matthew Southwell Published  August 12, 2003

Enterprise buyers are demanding that IT service providers offer a range of global sourcing alternatives, including on-site, domestic, offshore and nearshore capabilities. Furthermore, according to Gartner Dataquest, offshore and nearshore — services delivered from an adjacent or nearby country — are absolute necessities for IT services providers to even compete.

"Despite economic and geopolitical uncertainties, IT service providers with resources in India continue to be the dominant choice,” says Frances Karamouzis, research director for Gartner.

"There are thousands of external service providers (ESPs) around the globe responding to these demands by providing some part of their offerings through a lower-cost labor market, which makes the evaluation and selection process for enterprises more complex," Karamouzis adds.

Within the US, more than US$10 billion was spent on IT services in 2002. While still someway off that figure, the local market is also blossoming. Late last month IDC reported that the UAE’s IT services market was worth US$234.3 million in 2002.

Furthermore, the analyst house predicted that the sector is slated to grow rapidly over the next five years with an annual compound growth rate (CAGR) of 11.7%, which will result in a total market value of US$408.1 million by 2007.

“The majority of spending is still on standard hardware, software deploy and support services, as well as systems integration,” says Torben Pedersen, senior analyst, IDC Middle East & North Africa.

“Those three categories account for more than half of IT services spending, so the market is still very much driven by big projects where it is basic infrastructure deployment. There were a number of those projects last year, for example the ports in Abu Dhabi,” he adds.

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