Outsourcing gathers momentum in Australia
Australian businesses have had quite a bumpy ride over the past two years, a time when they operated on the thresholds of extreme uncertainties driven by Europe's unfolding economic saga, the slowdown in the US and of course, the ripple effect this had on China, Australia's largest trading partner. Now the country’s focus is on growth.
Findings of IDC's ANZ CIO Survey revealed that the top three business concerns for 2012-13 are finding new customers or customer segments, escalating costs of operation (or expansion) and expanding into new markets.
Corresponding to this growth agenda, the top ICT priorities identified by CIO's were lower overall cost structure, improve or simplify IT infrastructure (including consolidation) and build a more secure IT environment.
The Australia IT outsourcing services market (ITO) was estimated to be AUD$ 7.3 billion in 2011, constituting more than half of the total IT services market and forecasted to grow to AUD$ 9.5 billion by 2016.
The key drivers for the infrastructure services outsourcing (ISO) market, the largest by revenue size, were predominantly long term cost savings, consolidation and simplification of IT infrastructure, and access to new technical skills/competencies. There was also an increased prevalence of business-led conversations rather than the traditional “your mess for less” type of agreements.
"The move from capex to opex and greater expectations for return on IT investments will drive IT outsourcing engagements,” says says Raj Mudaliar, senior market analyst, IT Services Research Group, IDC Australia.
“However, though lowering costs is an important driver, customers are increasingly looking to outsourcing as a means of transforming their technology environments involving new technologies (e.g. virtualisation, SOA and mobility) and new service delivery models (e.g. private and public clouds).
"While the rumblings of change from a traditional to a cloud/cloud-based model of delivery have been around for some time, there appears to be a groundswell of events placing increasing pressure on traditional outsourcers to take a fresh look at their business models and reinvent themselves to be future ready,” he adds.