73% of Companies Outsourcing IT

According to preliminary results from an outsourcing study conducted by Cutter Consortium, 73 percent of companies surveyed outsource some part of their IT services. When asked which aspects of IT are outsourced, the top 5 areas were:

• Application development: 52%

• Hardware maintenance: 47%

• Training: 45%

• Web design: 40%

• Application maintenance: 35%

When asked to compare the amount of IT activities outsourced one year ago to the current amount, 50 percent said their companies are currently outsourcing more than they did a year ago. The top two reasons for increases outsourcing were satisfaction with a previous outsourcing experience (21%) and scarcity of qualified personnel (20%).

Michael Mah, a Senior Consultant on Cutter Consortium’s Sourcing Advisory Service and the Editor of IT Metrics Strategies says, "Companies want to reduce costs on legacy maintenance and redeploy assets to new applications development to enter new markets. Many companies are looking to access skills by buying them instead of ‘growing them organically.’ In many cases, companies also see an outsource provider as being able to help them speed process improvement. Whether this is the case ultimately depends on if an organization executes an effective metrics strategy to manage the contract and the service levels via a balanced scorecard."

Mah continues, "Speed to market also seems to be a critical factor. The need to have an e-commerce offering, take advantage of deregulation or capitalize on the reduced trade barriers all require speed to market as a key ingredient. Companies cannot grow or transform their IT capabilities to support changing business needs. Therefore, the strategy of outsourcing is very effective in achieving the speed to market many organizations need. If you cannot operate at Internet speed you get left behind!"

For more information, visit the Cutter Web site at www.cutter.com/consortium.