Apps outsourcing set to boom in 2003

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Want to know what to spend those IT pounds, Euros and dollars on this year? According to Gartner Dataquest, you won’t go far wrong by exploring an outsourcing deal with the sector set to grow significantly through 2003.

Companies offering information technology outsourcing see lower-cost foreign labour as a key to growth in 2003, according to the research firm, which also reported that the number of IT infrastructure outsourcing "megadeals" (those worth $1bn or more) rose from nine in 2001 to at least 14 in 2002.

Gartner’s November 2002 survey of 36 outsourcing companies showed that "offshore application management” was ranked as the highest-growth service opportunity in 2003. After that comes "near-shore" application management.Companies are also increasingly adopting business-process outsourcing -- which involves handling tasks such as billing and call centre operations -- and IT infrastructure management.

But all this is going to costs. Companies see increasingly willing to sign up for massive IT outsourcing deals. In 2002, there were at least 14 megadeals worth a total of $28.4bn compared with nine megadeals in 2001 worth a total of $15.1bn, Gartner said with at least four pending megadeals worth an estimated total of $15.3bn.

IBM won most of the megabusiness in 2002, with seven of the 14 megadeals awarded in 2002, and shared an eighth deal with Keane. Computer Sciences landed one megadeal, and Electronic Data Systems won two deals. Both are in final discussions for several, separate megacontracts. HP and Fujitsu landed their first megadeals, and CGI landed its third.

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