IDC: IT outsourcing market to grow by $1.6 billion to 2013

The dour economy is forcing companies to consider offshore IT outsourcing in a bid to cut costs and optimise headcounts, according to analyst firm, IDC.

In a report titled, Australia Outsourcing Services Market Forecast and Analysis 2009-2013, IDC valued the outsourcing market at $6.4 billion in 2008, and tipped a compound annual growth rate (CAGR) of four per cent over the next five years, taking the market's value to nearly $8 billion.

The figures encompassed sub-markets including applications management, desktop management, hosted applications management, hosted infrastructure services, IS outsourcing and network management.

IDC senior IT market analyst, Marina Beale, conceded Australia’s outsourcing rate is higher than other countries in the Asia-Pacific region.

“Asia-Pacific countries have reviewed their services forecast down where as Australia has kept it consistent at around four percent,” she said. “We are still seeing revenues flow in from outsourcing contracts that have already been signed and we also expect to see new deals coming up towards the end of the year. There is still potential for growth but not by too much.”

While no particular vertical is prone to outsourcing, some unusual players have entered the game.

“We are seeing the trend affect the finance sector as well as business analytics, which is uncommon,” Beale said. “But in general, it is coming from all areas and to anyone who is feeling the pinch and is reconsidering alternative outsourcing models.”

Local outsourcing in government sectors is also becoming popular with Logica signing a three year contract with The National Health and Medical Research Council and EDS winning a $96 million deal with Department of Agriculture, Fisheries and Forestry (DAFF) for managed IT services.