Introduction

Information Technology Outsourcing (ITO) industry research is not short of opinions and discussions around structural market trends (e.g., unbundling, consolidation, fragmentation). This abundance of opinions is not a sign of disarray in the market; rather it is an indication of the underlying complexity of the market structure and the evolving nature of ITO.

In most cases these trends are analyzed in the context of a single market segment (e.g., Application Outsourcing or Infrastructure Outsourcing). A more insightful approach to structural analysis would be looking at the ITO market from the client segment point of view (e.g., large vs. small enterprises).

This research attempts to analyze and understand key trends from the perspective of different client segments within the ITO market.

Scope

• Analysis of the ITO market composition and underlying trends for Mega-deals, Large Enterprises and Small and Medium Business market segments
• Overview of structural changes in the ITO market segments and potential implications for key stakeholdersContents

Contents

This research attempts to analyze and understand key trends from the perspective of different client segments within the ITO market. Key Insights are divided into four categories: forces shaping the ITO market structure and separate categories to get in-depth perspectives on the mega-deals, large enterprises and SMB segments of the ITO market respectively. Each category contains 4-6 key trends, which are discussed in detail (and illustrated with supporting data and analysis) to provide the reader information in easy-to-apply, bite-size pieces. For example, the large enterprises segment of the ITO market is influenced by the following key trends:

• Relationship consolidation: Supplier consolidation in ADM is driven by buyers’ desire to simplify relationship management, and avoid limiting ADM adoption due to complexity of relationships
• Adoption of labor arbitrage: The ADM market has stabilized and the momentum to get as many FTEs offshore as possible leads to slack in competitive dynamics
• Acceleration in market velocity: The average duration of deals in ADM and IO has declined over time, leading to faster contract expirations and more frequent renewals