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IT Services Outsourcing
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Competitive Intelligence

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Intelligence covers market and price outlook, SWOT analysis, demand & supply drivers, engagement models and Procurement best practices

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Intelligence on category covers the following aspects market outlook, supply market, SWOT analysis, Cost components & Price outlook, Demand and supply drivers, Engagement Models and Procurement Best Practices

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Supplier assessment covers the following parameters Financial Risk, Ethical, Labor, Environmental Compliance, IT Security.

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Abi will answer all IT Services Outsourcing related
procurement queries with relevant data points

Abi - AI powered digital procurement assistant

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Get up-to-date market and supplier info on IT Services Outsourcing to help you build

Intelligence covers market and price outlook, SWOT analysis, demand & supply drivers, engagement models and Procurement best practices

1

Intelligence on category covers the following aspects market outlook, supply market, SWOT analysis, Cost components & Price outlook, Demand and supply drivers, Engagement Models and Procurement Best Practices

manage-risk

Assess Supplier Risk based on key risk and compliance parameters

1

Supplier assessment covers the following parameters Financial Risk, Ethical, Labor, Environmental Compliance, IT Security.

2

Supplier assessment is powered by world’s leading data partners including D&B, CreditSafe, Dow Jones, Refinitiv, Orpheus

discover-supplier

Identify right fit suppliers based on your selection criteria including revenue, capabilities, certification, geography

1

Select suppliers based on industry, country, classification from a database of 4.2 mn suppliers. Get detailed supplier profiles with supplier capabilities, revenue, certifications, risk ratings

assess-category-perforamnce

Benchmark your category performance against peers and the market

1

Measure category performance on 15 key parameters across cost, risk and strategy KPIs

source-market-indices

Get information on key factors affecting your supply

1

Source Macro Data and Market Indices information from leading data sources across these key areas - Labor Rates, Currency, Energy, Country Risk, Trade Flow/Transportation, Port Data, Tariff, Weather and Epidemics

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Report Coverage

  • Market Trends
  • Technology & Innovation Trends
  • Global Supplier List and Capabilities
  • Mergers and Acquisitions

Market Size

Global Market Size

$405 Bn

CAGR

6 Percent

Market Size North America

$165 Bn

Market Size Europe

$105 Bn

Table of contents

  1. IT Services Outsourcing Executive Summary
  2. IT Services Outsourcing - Overview
  3. Global IT Services Outsourcing Outlook
  4. Supply Market Outlook
  5. Brexit - Impact on IT Services Outsourcing
  6. BREXIT Impact Update
  1. IT Services Outsourcing Procurement Best Practices
  2. Sourcing Models for IT Services Outsourcing
  3. Sourcing Models - Comparative Analysis
  1. IT Services Outsourcing Market Analysis
  2. Global IT Services Outsourcing Market Maturity and Trends
  3. Global IT Services Outsourcing Drivers and Constraints
  4. Regional Market Outlook
  5. Porter’s Five Forces Analysis
  1. IT Services Outsourcing SLA and KPI
  2. KPI and SLA Components
  3. Best Practices for IT Outsourcing
  1. IT Services Outsourcing Supply Analysis
  2. Supply Market Outlook
  3. Key Global SuppliersProfiling and SWOT
  4. Accenture
  5. Cognizant
  6. IBM
  7. HP Enterprise
  8. Tata Consultancy Services
  9. Infosys
  1. IT Services Outsourcing Cost and Pricing Analysis
  2. Pricing Models
  3. Pricing Models Comparison
  4. Cost Model in IT Services Outsourcing
  1. Technology Developments
  2. Robotic Process Automation
  3. Artificial Intelligence
  4. Predictive Analytics and Machine Learning
  5. Service Integration and Management
  1. End -User Industry Update
  2. Financial Services

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Global IT Services Outsourcing Market Outlook

  • The global IT services outsourcing market was valued at $405 billion in 2017. The market is forecasted to grow at a CAGR of 6 percent to $531 billion between 2022
  • Regions, such as Western Europe, North America, and some parts of APAC, such as China, India, Australia, Singapore, have high market maturity, and parts of Latin America are expected to be the future growth-driving markets for IT services outsourcing

it-services-outsourcing-market-size

IT Services Outsourcing Best Practices

The SLA structure for application development service consists of three main parts

  • Contract Definition: This specifies the terms and termination of the contract, dispute resolution terms and proprietary rights of the technology involved in the service
  • Performance Measurement: This specifies the application specifications, functionalities of the tool to be developed, in terms of KPIs and warranty provisions
  • Work Payment: This explains the phased payments during the development cycle and the respective payment options

Global IT Services Outsourcing Market Maturity

  • The IT outsourcing industry is currently in an evolution phase, and this will continue to be driven by changes in demand (technology, cost effectiveness etc.) thereby, shifting from the existing markets, i.e. Western Europe, North America, APAC etc. –to the least penetrated markets such as LATAM and MEA
  • In 2017, 700+ ITO contracts worth more than $130 billion and 150+ BPO contracts worth $25 billion were signed across the world

Global IT Services Outsourcing: Drivers and Constraints

Drivers

Emerging technologies/outsourcing needs

  • The global IT outsourcing market is driven by end-user computing services and technologies such as process automation and virtualization. These factors, along with an increase in security service outsourcing and cloud adoption, will continue to drive the market over the next 3–5 years

Increase in adoption

  • Outsourcing market research shows high adoption in IT outsourcing by industry verticals – BFSI, manufacturing, communication, etc. The prime factors that are driving this adoption are process optimization, cost saving, risk reduction

Delivery centers in offshore locations

  • Companies, such as IBM and Capgemini, are setting up delivery centers at low- cost offshore locations, like Philippines, China, Brazil, Poland, Mexico etc. The Indian vendors, such as TCS, HCL, etc., no longer possess this offshore advantage

Increasing competition in the market

  • Currently, the IT outsourcing services are dominated by Top 8-10 Tier 1 players. However, there has been an increase in competition from Tier 2/3 players in the market owing to demand from mid-size enterprises

Constraints

Breach of intellectual property

  • Protecting IP is one of the major challenges confronting the global IT outsourcing services market. Outsourcing business-critical tasks to other countries’ raises IP concerns, given several risks associated with theft, misuse of trade secrets, or loss of IP rights
  • Service providers are limited to work on the products of their customers and they don’t possess any ownership. Any innovation that emerges out as a result of the work carried out belongs to the provider. Therefore, the enterprises that outsource their services always have concerns for IP loss as the providers serve multiple customers, including their competitors

Volatile labor market

The market is encountering challenges, due to volatility in the labor market. This is being shaped by:

  • The continuous movement of low-cost labor offshore
  • A shortage of high-value skills around digital technologies

Market Analysis - IT Services Outsourcing

Shift toward third-party vendors

  • Traditionally, ERP players, such as SAP and Oracle, derived a large chunk of revenue from maintenance fees. This has forced the buyers to engage with third-party vendors such as Rimini Street and Spinnaker to maintain and support the ERP system to optimize costs
  • Buyer preference to engage with third-party system integrators for infrastructure management instead of OEMs, like IBM and HP, is expected to continue, as third-party suppliers offer a quality of service similar to that provided by OEMs at lower cost
  • Increasing cloud adoption: Increase in SaaS adoption is expected to lower the demand for application maintenance outsourcing. This has forced many suppliers to invest in cloud-based offerings to stay competitive in the market
  • In the IT application outsourcing vertical, suppliers are experimenting with new models, including risk-shared partnerships
  •  IT outsourcing buyers are increasingly looking for more vertical expertise from their suppliers

It Services Outsourcing Frequently Asked Questions

  1. At what CAGR is the IT services outsourcing market expected to grow by 2022?
  2. As forecasted by Beroe’s market research, outsourcing of the global IT services is expected to grow at a CAGR of 6 percent to reach $531 billion by 2022.
  1. What was the valuation of the global IT services outsourcing market in 2017?
  2. According to the industry analysis reports from Beroe, in 2017, the global IT services outsourcing market was valued at $405 billion.
  1. Which regions have high maturity in the global IT services outsourcing market?
  2. The high market maturity regions are Western Europe, North America, and some parts of the APAC, such as China, India, Australia, Singapore. Besides, some parts of Latin America are anticipated to become the growth driving markets in the future.
  1. Which countries have medium maturity in the global IT services outsourcing market?
  2. Some of the countries with medium market maturity are New Zealand, Canada, Argentina, Chile, Egypt, Peru, Columbia, Romania, Poland, etc.
  1. Which is the impactful cost component in the IT services outsourcing market?
  2. The service provider’s delivery cost constitutes more than 60 percent of the total cost.
  1. What are the KPIs in the IT outsourcing market?
  2. The KPIs in the IT outsourcing market include response time, resource turnover, application breakdown per day, network availability, and percentage of work offshored.
  1. Who are the top global service providers in the IT outsourcing market?
  2. Accenture, Capgemini, Cognizant, Fujitsu, HP Enterprise, IBM, Infosys, NTT Data, Oracle, SAP, Tata Consultancy Services are the top global IT outsourcing service providers.
  1. What are the price-determining factors in the IT outsourcing market?
  2. The price-determining factors in the IT outsourcing market include customer maturity, contract size, services, supplier relationship, and service capability.
  1. What are the different outsourcing pricing models in the IT services market?
  2. The pricing models in the IT outsourcing market are time and material pricing, fixed pricing, transaction-based pricing, and outcome-based pricing.
  1. What are the best practices in IT services outsourcing?
  2. In application development service, the service level agreement structure is formed of three main parts: · Contract definition specifying the terms and termination of the contract · Performance measurement · Work payment
  1. Which factors are responsible for driving the evolution of the IT outsourcing industry?
  2. The evolution of the IT outsourcing industry will continue to be driven by factors, such as changes in demand for technology, cost-effectiveness, etc. leading to the shift from existing markets to least penetrated markets.
  1. What was the valuation of the ITO and BPO contracts signed across the world in 2017?
  2. According to Beroe’s market analysis reports, in 2017, more than 700 ITO contracts and 150 BPO contracts worth $130 billion and $25 billion respectively.

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