IT infrastructure most lucrative to outsource

By Kirsty Barnes

- Last updated on GMT

Related tags: Business process outsourcing, Outsourcing

IT infrastructure is the most lucrative IT function to outsource,
according to new research.

Two thirds of companies - both large and small - currently carry out some form of IT outsourcing, with cost savings as the primary motivator for the majority of these, found a study from Info-Tech Research Group. Infrastructure is the most cost-beneficial function to outsource, reaping up to 27 per cent in savings, found the Info-Tech survey of 1,600 US businesses in 2006, which compared the cost-benefits of four commonly outsourced areas of IT - infrastructure, application development, application and help desk. In addition to offering the biggest cost savings, outsourcing IT infrastructure also offered the highest chance of success and lowest risk. "Every enterprise should evaluate their infrastructure, both server and network, for an outsourcing fit,"​ said Info-Tech Research Group consultant Jennifer Colasanti. Meanwhile, outsourcing IT application development was found to deliver the next best cost savings, with an average of 20 per cent, followed by application support with16 per cent, trailed by help desk with only 13 per cent savings. However, for one third of firms, increased efficiencies, not cost savings, was identified as the top outsourcing motivator. "In these instances, benefit drivers like access to more expertise, repurposing of employees and the reduction of management overhead and internal training bring greater benefit to the business than cost savings alone,"​ said Colasanti. The pharmaceutical and life sciences industries are flushed with quality IT services, with eight companies that have a specialist life science/pharmaceutical focus being featured in the top 20 of the first-ever listing of the world's top outsourcing service providers, released in 2006 by the International Association of Outsourcing Professionals (IAOP). Meanwhile, other recent research indicates that more companies in the pharmaceutical industry than any other industry are set to increase their reliance on business process outsourcing this year. Both cost and process improvement were motivating factors for undertaking BPO, according to Equaterra, the consulting company that produced the research. Of the 25 large pharmaceutical companies surveyed, 44 per cent of firms that had outsourced one or more business process areas planned to expand their outsourcing into new process areas, 39 per cent planned to expand outsourcing into new geographies or business units, while 22 per cent planned to expand in the existing process areas outsourced, and nobody planned to cut back their outsourcing, said the report. Although finance and accounting is currently the least popular business process to outsource, with a current rate of only 11 per cent, this function was tipped to see the biggest growth over the next year.

Related topics: Markets & Regulations, Data management

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