According to the “Impending Contract Renewals: Back to the Future” study by global services advisory and research firm Everest Group, many information technology outsourcing (ITO) and business process outsourcing (BPO) deals signed before the economic downturn are set to end in the next 12 to 18 months. The total contract value (TCV) of these deals will reach over US$85 billion by the end of 18 months. However, IT contracts that are set to expire in the 12- to 18-month timeframe are smaller compared to the previous year.
Ross Tisnovsky, Senior Vice-president at Everest Group, said majority of ITO contracts deal with infrastructure outsourcing, data center, and network tower. However, with the rapid adoption of cloud computing, the IT segment will see changes that were not predicted five years ago. Furthermore, the purchasing habit of clients has become a factor since they are no longer after just cost savings, but overall service quality.
Other factors that are set to influence ITO renewals included in the report are:
• Cloud computing will be a game changer for data center and applications projects.
• The number of remote infrastructure management outsourcing (RIMO) deals is rapidly increasing and gaining foothold.
• The gradual increase of mobile technology and data issues will affect the decision-making process of providers.
• Multi-sourcing and more focus on pricing models are seen in new deals.