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Outsourcing costs expected to decline in 2010

by: Carlo Abadilla

Monday, January 11, 2010 |

Industry experts are expecting that the downward trend in prices for IT services during 2009 will continue this year. According to CIO, the main causes for the trend are the global economic slowdown, increased offshoring activity, pricing pressure from buyers, and disaggregated vendor services.

Compass America calculates that the costs for a majority of infrastructure services-desktop,  mid-range, and network services will decline at single-digit percentages this year. This excludes storage costs, however, which are expected to decline another 25% this year.

Ben Trowbridge, CEO of outsourcing advisor, Alsbridge, states that although providers will remain focused on cost cutting and avoiding future investments,  "price pressure will be tempered by the need to ensure overall deal parameters do not jeopardize success".

Despite the forecasts on the trend prevailing in 2010, some believe that it will not be a “buyer's market” should the economy show signs of recovery.  Chris Kalnik, partner and managing director of financial analysis for sourcing advisor TPI quotes:

"If the economy strengthens, TPI believes that the service providers will attempt to recoup some of the price concessions that they have made over the past year."



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