IT outsourcing spending to grow as Cloud starts to take off: Gartner

IT outsourcing spending in Australia will continue to grow as more organisations look to the Cloud, according to Gartner analyst Rolf Jester.

Gartner’s recent outlook shows that worldwide IT outsourcing services spending is to increase 2.1 per cent from last year; to reach $251.7 billion in 2012.

In Australia, $7.5 billion is being spent on IT outsourcing this year, a 3.2 per cent growth from last year, Jester said. “The outsourcing growth to the year 2013 is about 3.7 per cent. Through to 2016, so the next four years, we believe that the compound annual growth rate will be 3.8 per cent.”

Infrastructure-as-a-service (IaaS) is the fastest growing segment within IT outsourcing market worldwide, according to Gartner’s outlook, and is expected to reach $5 billion, a 48.7 per cent growth from last year.

Jester said he expects IaaS will continue to grow and play a bigger part in Australia’s IT outsourcing spending.

“There’s only about 3.2 per cent [IaaS] of the total of the outsourcing market this year in Australia,” he said.

“Next year will be 50 per cent bigger than this year and the year after that 50 per cent bigger again. The compound growth rate for the next four years is a little bit less than that, 36 per cent. But these are huge growth rates, so even though it’s really tiny now by 2016 it’ll be a substantial part of the outsourcing market.”

This growth in IT outsourcing is primarily due to the need for IT to focus more of its time on innovation and finding new ways of being more competitive in business, which means having to outsource infrastructure and maintenance work, Jester said.

“Probably the strongest reason of all is that they do want to actually invest in IT that makes a difference to their business and therefore they want the routine business-as-usual stuff – running the infrastructure, for instance – to be done by someone else so that they can focus their own attention, their own staff on things that are frankly more important to them such as innovation,” he said.

“In order to free up money for that and in order to free up their people for that, they’d like to spend less time and maybe less money if they can on keeping the lights on, so the speak, and just running the engine room. Hence, that drives a lot of the steady state sort of outsourcing business that’s going on.”

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