Outsourcing foes may see one of the statistics from IDC's 10th annual study of the 100 largest global outsourcing deals as a cause for celebration. According to the study, the overall value of these contracts dropped 3.1 percent, from $70.1 billion in 2004 to $67.9 billion in 2005.
Not so fast on the party hats, though. According to IDC (and other observers too, we'd venture), this just marks a shift in the market. Deals in the $500 million to $1 billion range declined, but those valued at $250 million or less increased dramatically.
While the number and value of business outsourcing deals dipped in 2005, IT outsourcing deals proliferated.
Providers appear to be just slightly behind the curve when it comes to meeting companies' changing needs. An IDC analyst says they'll need to provide more flexibility and enhanced services. Also good ideas: forging partnerships with software and system providers and looking at new market segments such as SMBs.
Providers won't be the only ones who need to make changes. Many observers, including Gartner, say companies need to ensure that their own practices keep pace with rapidly changing expectations.