Information technology research and advisory firm Gartner on Wednesday said, the worldwide IT outsourcing (ITO) market is expected to reach $288 billion in 2013, witnessing an increase of a 2.8% in the US dollars when compared with 2012. The advisory firm also said compared with previous forecast, nearly all outsourcing segments are now forecast to grow more slowly during 2013.
“We continue to see overall market growth being constrained by near-term market factors, such as evolving ITO delivery models, economic, political and labor conditions, and service provider financial performance," said Gartner, Research vice-president, Bryan Britz.
Gartner's forecast includes slight upward revisions for both custom application outsourcing and infrastructure utility services (IUS) for 2014 through 2017. Although software as a service (SaaS) impacts the ITO market, it is forecast as part of the software market, rather than as part of the ITO market.
According to Gartner, the exchange rates remain a significant factor in analysing growth in any single currency. “Mature Asia-Pacific and Western Europe are the regions where the outlook is most tempered, partly due to currency but also reflective of our view that 2013 is likely to be similar to 2012 in these regions,” Britz said.
The firm also said accelerated buyer plans related to bring your own device (BYOD), and reduced enterprise support requirements for end-user devices produce a more tempered outlook for end-user outsourcing than in past quarters. Outsourced support for mobile end user devices will see strong growth through 2017 due to increased enterprise adoption of mobile devices, including smartphones, tablets and other hand held devices, added the report.
The firm in its report also said ITO markets in emerging Asia- Pacific, Latin America and Greater China will all grow more than 13% in 2013 and 2014. Expansion by multinationals into these regions, new buyers of ITO that are themselves growing organizations, and fertile economic conditions all drive the positive outlook.
“Planned new adoption of ITO remains positive in all service line segments. However, constrained IT budgets, an evolving ITO delivery model, economic conditions and cost-focused buyers are limiting the growth potential of the ITO market,” he added.
In North America, Gartner predicts that buyers will seek to transition more IT work to annuity-managed service relationships for cost takeout and more predictability in IT costs. This will keep ITO growing in the region through 2016. Economic austerity initiatives and enterprises pursuing asset-light IT strategies continue to push clients toward externally provided services, the report added.