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A Time To Question What They Believe, A Time To Doubt What They Trust and No Time For Mistakes, IDC Alerts Outsourcing Service Providers

  • 02 June, 2005 12:02

<p>NORTH SYDNEY, 2nd June 2005 –The outsourcing market has grown a conservative 6.6% in 2004 in comparison to 2003, according to the latest "IDC Australia Outsourcing Tracker." This research tracks, on a twice yearly basis, the spending on outsourcing for organisations procuring services from an external service provider. The components tracked within the outsourcing engagement include IS outsourcing and other discrete services including application management, network and desktop management, ASP (software as a service) and SISP (Systems Infrastructure Service Providers).</p>
<p>IDC found that 2004 did prove a challenging year for outsourcers as Australian organisations moved towards adopting a selective outsourcing approach, which led to the breakup of a few large whole-of-IT outsourcing contracts. IBM, EDS, CSC and HP maintained their leadership positions as the top four IT services provider.</p>
<p>Within the outsourcing marketplace IBM emerged as the winner with a share of 21% of the total outsourcing market in Australia. Telstra/KAZ moved to the fourth position earlier occupied by HP as a result of the merger. LogicaCMG with a few major wins in the utilities vertical, secured a position amongst the top 10 IT outsourcing service providers and CITEC improved its positioning and moved to the seventh position earlier held by Unisys.</p>
<p>"With the trend towards selective sourcing, the outsourcing service providers in 2005 will revisit their positioning strategies in terms of value propositions and pricing to compete with their counterparts. They will also face competition from the mid-market service providers who have been strong in their niche verticals, but now eyeing the top tier opportunities within organisations. 2005 will also be a year of alliances as the large outsourcers redefine their channel strategies to address opportunities in the midmarket," said Aprajita Sharma, IDC Analyst for Outsourcing and BPO.</p>
<p>"This year will also see some of the offshore outsourcing players, such as Infosys, HCL and Wipro aggressively positioning the offshore delivery model within outsourcing engagements. Currently these companies have only been involved in discrete systems integration and application management projects but are looking towards expanding the portfolio of their offerings to include services such as infrastructure management," added Ms Sharma.</p>
<p>IDC's Outsourcing market highlights for 2004:</p>
<p>* EDS closely followed IBM as the second largest outsourcer, with 19.3% share of the market. EDS is in the process of restructuring their service offerings to align with the Agility Infrastructure strategy.</p>
<p>* CSC remained strong in the defence vertical with a share of 11.1% of the outsourcing market.</p>
<p>* HP won some significant contracts but just managed to take approximately 3% of the outsourcing services market. They have increased their focus on the Adaptive Enterprise strategy and are aggressively marketing this concept in the marketplace.</p>
<p>* CSC remained strong in the defence vertical with a share of 11.1% of the outsourcing market.</p>
<p>* IBM, EDS and HP revamped the portfolio of their outsourcing services to target the small and medium businesses.</p>
<p>To find out more about the Australia Outsourcing Tracker, or to purchase this research, please call the IDC sales team on (61 2) 9925-5300 or email Gary Clarke on</p>
<p>For press enquiries please contact:
Aprajita Sharma
Market Analyst, Outsourcing and BPO
Phone: 61 2 9925 2257</p>
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