IT outsourcing market to grow 2.8% to $288 billion in 2013: Gartner

The IT outsourcing market is likely to grow 2.8 percent to $288 billion in 2013, according to Gartner.

Constrained IT budgets, evolving ITO delivery model, economic conditions and cost-focused buyers are limiting the growth potential of IT outsourcing market.

Enterprise buyers pursuing hybrid IT strategies and small and midsize business buyers adopting infrastructure as a service (IaaS) are key drivers in cloud and data center service segment growth rates.

The global market size for data center outsourcing is in gradual decline due to workloads moving to IaaS and to IUS exceeding the net-new adoption of data center outsourcing.

Gartner says 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 handheld devices.

Desktop outsourcing, however, is in a gradual decline that would be sharper were it not for uptake in Latin America, emerging Asia/ Pacific and Greater China.

ITO markets in emerging Asia/Pacific, Latin America and Greater China will grow more than 13 percent 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.

In North America, 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 (fueled by a reluctance to hire or make large capital purchases) and enterprises pursuing asset-light IT strategies continue to push clients toward externally provided services.

“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 Bryan Britz, research vice president at Gartner.

Earlier this year, India’s Economic Survey said India has lost about 10 percent share of the global BPO market in the last five years to destinations like China, the Philippines and Brazil, raising concerns for the $20-billion Indian BPO industry.

Countries like Malaysia, China and the Philippines in Asia; Egypt and Morocco in North Africa; Brazil, Mexico, Chile and Columbia in Latin America; and Poland and Ireland in Europe are emerging as attractive destinations for voice contracts, posing a significant threat to Indian firms.

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