Research released today by Valueshore Spain, the Spanish Government-backed group of IT consultancies, has found that custom application development and maintenance is set to be the biggest outsourcing focus for UK businesses over the next 12-18 months. 62% of IT directors questioned said that they already were, or planning to, outsource custom applications as businesses look to reinvest in IT following the recession. A report by IDC recently indicated that the European IT services market is due to grow by 2.2% in 2011*, with outsourcing set to be a major contributor.
The Valueshore research revealed that outsourcing the maintenance of packaged applications, such as SAP and Oracle, will also be a priority with 50% of those asked saying they would be looking outsource this function in the near future. There will also be a demand for outsourcing Remote Infrastructure Management (RIM), where the outsourcer remotely manages a client’s IT infrastructure, with 43% signalling they would be outsourcing RIM. When it comes to outsourcing business processes or Business Intelligence (BI) functions, the research indicated that the vast majority of companies prefer to keep this in-house. Only 31% of those questioned will be investing in Business Process Outsourcing (BPO) while 16% of organisations asked will be outsourcing their BI functions.
Daniel Naoum, co-founder of Valueshore Spain, commented: “With analysts predicting an increase in IT outsourcing over the next year or so, it’s important that businesses carefully consider which business function they should outsource. This research has indicated that application development and maintenance is growing in popularity, however many businesses still aren’t prepared to outsource functions such as BI. Every company will have different priorities and as such, some functions are better kept in-house, while others become more efficient when outsourced. Getting outsourcing right is about taking the time to develop a contract tailored to each business. In the current climate no organisation can afford to rush into an outsourcing contract with the wrong provider in the wrong region.”
Findings from a Valueshore study earlier in the year showed that, despite the renewed interest in outsourcing, businesses are taking risks by focusing not on long-term gains such as quality, innovation and the improved efficiency such attributes bring, but on day-rates and initial cost savings.
Naoum added: “When a company is looking at outsourcing, it’s tempting to base outsourcing decisions purely on day-rates. Although this will cut costs in the short-term, for continued savings, businesses must consider other factors. If you’re going to get the best results, you need to outsourcing to a region that is skilled in that particular area. Each country has its own specialist expertise and, with this in mind, companies should really consider outsourcing providers and regions with a proven track record in their industry. It’s important to remember that outsourcing is very much a partnership. For it to work effectively, businesses must trust their outsourcer and be confident that they have the skills required to ensure significant and continual cost savings in addition to IT and business expertise.”
The survey of 200 UK IT directors was commissioned by Valueshore and conducted by independent research company Vanson Bourne.
*Taken from the IDC Western European IT Services Market 2009 and Forecast 2010–2014 (IDC #Q01S, April 2010)
About Valueshore Spain
Valueshore Spain (valueshore.org) is a collaboration of 25 of Spain’s leading IT consulting firms aimed at promoting the region as a nearshore hub for innovation in Western Europe. Founded in 2008 by the AEC (the Spain association of consulting firms), its members represent over 80% of the total turnover of the management and technology consultancy market. The group also employs over 60% of the professionals in this sector.
Valueshore Spain aims to make outsourcing to Spain easy by providing companies with access to the information they need. This includes organising site visits, providing legal support and offering independent quality control of an outsourcing project.