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Outsourcing spending on IT services set to grow

Simon Quicke

Outsourcing is set to grow this year particularly on the IT services front as more firms across Europe look to work with third parties.

According to the latest figures from Gartner 40% of European companies were planning to increase external IT services spending and overall half of the budgets being spent was being portioned to be used on outsourcing.

Customers continue to look to external outsourcers to deliver cost savings said Claudio Da Rold, vice president and distinguished analyst at Gartner.

Gartner's latest survey of the market also revealed that more smaller companies are looking to outsourcing with the number of companies with IT budgets of under €1m looking at the option doubling year on year.

"Although we conducted this survey in the first quarter of 2010, before the start of the Greek financial crisis, we believe that the cautious expectation of growth will continue in Europe beyond 2010," said Da Rold.

"Regardless of the future direction of the economy, European businesses and their service providers need to optimize their multisourced environments, while increasingly adopting industrialized IT services," he added.

Nathan Marke, CTO of 2e2, said that the findings would not come as a surprise to those providing outsourcing in the channel.

"They can see that managed services and cloud computing financial models allow them to achieve their goals whilst reducing capital expenditure," he said.

"Organisations realise that by using external providers and cloud computing models they can gain more flexibility in their cost and skills base, while also getting the elasticity and scalability needed for growth, at less cost and with greater flexibility than traditional IT models," he added.

But there were warnings sounded about the focus on costs with Daniel Naoum, co-founder of Valueshore, highlighting the danger of just paying for services that have an attractive price tag.

"Traditional offshore destinations, such as India, don't always offer continued cost savings and overall business management efficiency.  These regions are generally far away from European business hubs and, as such, the time and money spent managing operations can negate the initially attractive cost savings," he said.

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