Aussie companies rethink offshoring: Report

Peter Dinham
Tuesday, 02 June 2009 14:26

IT Industry - Strategy

In a counter to the current economic downturn, IT outsourcing in Australia has gained new momentum this year as companies, driven by the need to reduce costs, are apparently reconsidering the benefits of offshoring.

IDC, in its latest report on the Australian market, says IT outsourcing is gaining momentum as companies, which have not previously considered outsourcing, reconsider its benefits as they cut costs and look to optimise headcounts.

The report - Australia Outsourcing Services Market Forecast and Analysis 2009-2013 - reveals that the total outsourcing market in Australia stood at $6.4 billion last year and is predicted to grow at a five year compound annual growth rate (CAGR) of 4% between this year and 2013.

According to Marina Beale, senior market analyst, IT services at IDC, even organisations that have previously shied away from offshore outsourcing are “actively evaluating this delivery model to reduce back office costs and gain access to skills while optimising their resources to adapt to the slowdown in the economy.”

"The current economic situation is driving more organisations to think seriously about outsourcing as a way to keep costs down; in particular we expect to see a greater interest in managed services.

“In a time like this, to have differentiated outsourcing strategies and options that address the diverse needs of a cost conscious market, will benefit the market,” says Beale, adding that "overall any cost cutting solution will be high on the agenda for most company CIOs.”

Beale maintains that virtualisation, cloud computing/SaaS are examples of solutions that offer potential savings related to both capital expenditure as well as operational expenditure, and she says companies, large and small, can “potentially benefit from these technologies/delivery models, which would level out the competitive playing field."
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