Gartner Says Worldwide Outsourcing Market to Grow 8.1 Percent in 2008

Outsourcing Trends to Be Discussed at Gartner Outsourcing Summit,
May 19-21 in Washington, D.C.
STAMFORD, Conn.--(Business Wire)--The global outsourcing market continues to grow at a steady pace,
with a forecast growth rate of 8.1 percent in 2008. But healthy growth
rates for outsourcing do not necessarily mean that user organizations
are without challenges.

"Although user organizations often have fundamentally sound
procurement organizations to initiate outsourcing contracts, for many,
their IT sourcing strategies and governance structures are still
immature, lacking altogether, or misaligned with enterprise
objectives," said Kurt Potter, research director at Gartner. "Because
these organizations lack the basic building blocks for successful
vendor management and outsourcing success, expected cost savings and
other benefits are difficult to obtain. In extreme cases, the lack of
needed trust and control to optimize the outsourcing relationship
results in deal failure. Also, more organizations focused less on
outsourcing for cost savings than in previous years and more on using
providers' global delivery models to access the right skills at a
reasonable price, wherever they are."

Although outsourcing continues to grow, publicly reported IT
outsourcing (ITO) and business process outsourcing (BPO) contract
values decreased overall by 50 percent in 2007. Part of the
explanation for this apparent discontinuity is that as the outsourcing
market matures and becomes more commonplace, there is less publicity
of deals. Companies are simply outsourcing more, but electing to use a
multiprovider strategy and more deals are simply smaller in size, with
many of these deals not large or ground shaking enough to report.

"In 2008, we expect to see some early adopters of multisourcing to
consolidate around fewer providers to reduce their service integration
costs and harvest the benefits of better relationship management with
fewer strategic suppliers," said Mr. Potter. "Because of multisourcing
complexities often associated with handoff points between competing
providers and unclarified vendor management processes, some
organizations will consider prime-contractor outsourcing models or the
appointment of new vendor management roles in their retained
organizations."

Buyers increasingly are moving work to lower-cost, offshore
delivery centers. Although cost remains a major driver for global
delivery models (GDMs), more-mature users are seeking ways to better
support their business needs. Indian providers gained traction in
Europe in 2007, but faced strong competition from more-established
vendors with GDMs. Indian providers are growing approximately 40
percent annually in the U.S. and 60 percent annually in Europe.
Although spending on offshore services is three times higher in North
America than in Western Europe, the gap is closing.

"Other countries will continue to emerge as challenges to India
for a number of reasons," said Ian Marriott, research vice president
at Gartner. "Strong demand is putting a strain on the available Indian
labor force, while staff attrition and cost increases remain high.
Global companies continue to accelerate their demands for a presence
in countries other than India, and providers are seeking to expand
their geographic footprint of delivery centers accordingly.
More-sophisticated buyers are seeking a multicountry strategy to
minimize risk and align nearshore and offshore delivery centers with
their primary time zones. Although India's offshore revenue will
continue to grow, the country's share of total offshore spending will
decline slightly in 2008."

Gartner believes that the outsourcing market has reached a tipping
point with regard to utility delivery models, and that change and
innovation will take hold and accelerate in this area through 2008 and
beyond. More providers are developing utility-based offerings across
infrastructure, application and business process domains. The trend
toward software-as-a-service (SaaS) is gaining the most traction, with
major software vendors, such as Microsoft and SAP, and large Internet
players, such as Google and Amazon, making announcements about new
SaaS offerings and mass-customized software platforms. User
organizations need to realize that the utility delivery model is a
viable alternative to traditional outsourcing, and they should
seriously consider utilities in their sourcing strategies.

Additional information on what happened in outsourcing in 2007 and
what Gartner expects in 2008 is available in the Gartner report
"Gartner on Outsourcing, 2007-2008." The report is available on
Gartner's Web site at www.gartner.com/
DisplayDocument?ref=g_search&id=560809&subref=simplesearch. (Due to
the length of this URL, it may be necessary to copy and paste this
hyperlink into your Internet browser's URL address field.)

Gartner analysts will further discuss outsourcing trends at the
Gartner Outsourcing Summit, taking place May 19-21 in Washington, D.C.
The Gartner Outsourcing Summit is the only event that provides a
comprehensive view of the entire outsourcing market -- infrastructure,
application and business process outsourcing, global delivery and the
use of offshore providers, as well as issues and trends about new
delivery models, such as software as a service. The Summit provides
unbiased, road-tested advice and best practices necessary for setting
outsourcing strategies and objectives, evaluating and selecting the
right service providers and managing relationships with them. Many of
the 50-plus content sessions will feature case studies and panel
discussions presented by end users and industry professionals. For
complete event details please visit the Gartner Outsourcing Summit Web
site www.gartner.com/us/outsourcing.

Members of the media can register by contacting Christy Pettey at
christy.pettey@gartner.com.

About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information
technology research and advisory company. Gartner delivers the
technology-related insight necessary for its clients to make the right
decisions, every day. From CIOs and senior IT leaders in corporations
and government agencies, to business leaders in high-tech and telecom
enterprises and professional services firms, to technology investors,
Gartner is the indispensable partner to 60,000 clients in 10,000
distinct organizations. Through the resources of Gartner Research,
Gartner Consulting and Gartner Events, Gartner works with every client
to research, analyze and interpret the business of IT within the
context of their individual role. Founded in 1979, Gartner is
headquartered in Stamford, Connecticut, U.S.A., and has 3,900
associates, including 1,200 research analysts and consultants in 75
countries. For more information, visit www.gartner.com.

Gartner
Christy Pettey, 408-468-8312
christy.pettey@gartner.com

Copyright Business Wire 2008