Friday, September 23, 2005

According to a report by IDC, the US offshore IT services market is expected to nearly double in size to an estimated USD 14.7 billion by 2009, driven by growth in specific industries, such as discrete manufacturing and financial services.
Cost savings remains the leading driver for adoption for all types of offshore services. However, nearly half of the companies surveyed also leverage offshore capabilities to support new service and technology delivery models within their organizations. In addition, industry expertise is now a key factor in selecting offshore providers.

IDC expects the US offshore IT services market to increase at a five-year CAGR of 14.4 percent. Discrete manufacturers will continue to generate the largest percentage of overall revenue for offshore services providers, accounting for 17 percent of spending by 2009.

Retail, communications, banking, insurance, and other financial services companies are also expected to be prominent users of offshore IT services. In aggregate, the financial services industry is expected to account for 28.9 percent of the total expenditure by the end of the forecast period. In general, discrete manufacturers and healthcare respondents viewed offshore services as an important cost-cutting mechanism, with the majority of discrete manufacturers also citing offshore services as an increasingly strategic component of IT delivery.

A report by Forrester Research has ranked UK as the top European outsourcer during 2Q of 2005, accounting for 39 percent of the outsourcing deals. For the period between April and June, 2005, the British and German companies, particularly in the financial and public sectors, closed most of the EUR 5 billion in outsourcing deals.
The survey covered 67 outsourcing deals exceeding EUR 10 million in contract value involving 22 vendors.

Germany and The Netherlands shared the first outsourcing tier with the UK, while Italy entered the group for the first time, with seven major deals. Norway reported four deals brought in by IT services provider EDB. Telecom and network outsourcing witnessed a substantial growth, accounting for almost a third of the quarter's deals.

The study identified BT Global Services as heading the vendor table for deal value, winning a EUR 2.2 billion deal with the UK Ministry of Defense.


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