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April 2009 Quick Hits - News, Trends & Analysis

Using E-Auctions For Outsourcing IT Services
The UK Government has been wasting billions of tax payers money on various initiatives in the past decade, so it always warms the heart when you read a story about money being spent wisely. It is reported on computerweekly that several consultancies helped 47 public sector organisations run e-auctions for IT equipment and services, saving the tax payer a staggering £10.5MM. Ian Grant comments on Computerweekly, "Collaborative online auctions, in which organisations pool their requirements and invite suppliers to bid down the price, are a major component of the government's ICT strategy". Auctions can achieve results in 30 minutes that might not be possible during months of negotiations. As long as the government uses the tool effectively, it will be a success and benefit the public.  
Remote Infrastructure Management Services Will Fuel Growth For Indian Offshoring Providers
In the past decade, the rapid rise of application development, maintenance & BPO services have spurred phenomenal growth for the Indian offshoring industry. However, a recent report by Nasscom/McKinsey predicts that the $524BN infrastructure management services industry that manages enterprise core IT systems, including hardware, software, connectivity and people, will be the next big growth area for India. As commented in offshoringtimes "The majority of growth is likely to come from offshoring midrange services, and network towers, likely to account for approximately 70 per cent of the overall opportunity during this time. In terms of industries, the banking, financial services and insurance industries will lead this growth followed by the telecommunications industry". The likes of TCS, Infosys and Wipro are gaining ground very quickly on the traditional outsourcers, and during a period of history where cost is everything, it is not surprising to see them move into other services to steal market share from the likes of IBM, Accenture and CSC.  
Outsourcing Services During The Recession
Many large IT projects, particularly around new application development, have been put on hold the past 6 months. Industry watchers including the NOA made the comment that we may soon see price wars in this area. As Denise Dubie comments on CIO.co.uk "Gartner has forecast that the prices of outsourced IT services will shrink by five per cent to 20 per cent during 2009 and 2010, due to the "economic climate, IT budget constraints and general market consciousness. The firm expects the biggest price reduction to come in the cost of outsourced network services and application hosting services". IT buyers today should renegotiate contracts for the short-term (12-18 months) as further price reductions are expected. Many outsourcers are revamping their pricing models, and are offering customers cloud computing models, software-as-a-service and pay-as-you-go platforms. In short, there has never been a better time to be a buyer of outsourcing services. Prices are dropping, quality is high and the biggest gain to your organisation will be the ability to leverage your internal IT people to work on business transformation projects while outsourcing lower value work to a partner that can do it more efficiently. 

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