Forrester predicts death of traditional outsourcing

Forrester predicts death of traditional outsourcing

Bangalore: Cloud-based technologies that allow clients to access services, applications and other resources over the Internet are gradually disrupting the traditional information technology (IT) outsourcing business, especially as the cost advantage this model offered was shrinking, according to Forrester Research.

IT outsourcing as traditionally understood is on its deathbed, Ellen Daley, vice-president and practice leader at Forrester Research said at a press briefing in Bangalore on Tuesday. She attributed the shift to innovation and the rise of better technologies available to consumers.

A study by Forrester covering 568 companies, mostly in the US and some in France, Germany and the UK, shows clients are increasingly finding that cost-savings, a key factor in outsourcing, was lower than expected.

In addition, client frustration over the quality of the work was increasing, the study revealed.

Core enterprise resource planning applications, long the mainstay of corporate IT, “will sink in emphasis," she said.

The study also revealed client spending on enterprise resource planning, long the mainstay of corporate IT budgets, and human capital management software was significantly declining over the years. While budgets for customer relationship management were holding steady, spending on areas like business intelligence, comprising advanced predictive analytics, was rapidly increasing, Daley said.

She added that large enterprises too are showing interest in adopting cloud-based technologies.