Introduction

In order to better understand key market trends and how they affect the IT outsourcing market, Everest conducted an ITO Request for Information (RFI) exercise in Q3 2007. The RFI studied outsourcing transactions which fall into infrastructure (IO) or applications development and maintenance (ADM) outsourcing.

This report discusses key messages from the IT Outsourcing RFI 2007 and data-driven conclusions on the market trends in ITO and its key market segments. Both buyers and suppliers will gain a deeper understanding of the ongoing evolution in the ITO market, and will be better positioned to adapt to changing market conditions.

Scope

• The Everest ITO Request For Information (RFI) exercise was conducted in Q3, 2007. We analyzed a representative sample of responses from twelve ITO suppliers. These included large multinational suppliers with headquarters in Europe, North America and India
• We asked RFI participants to report their 25 largest ITO deals (by total contract value) for FY2006. We asked respondents only for their top deals, so as to focus on the high-value ITO market and to limit the extent of effort required for data collection
• A total of 437 ITO deals were reported and analyzed. The analyses are based on aggregated summaries of the responses by a relevant category (i.e., buyer geography, buyer revenue, industry group, supplier type, etc.)

Contents

This research attempts to analyze and understand key trends from the perspective of deal activity within the high-value segment of the ITO market. Key Insights are divided by function into three categories: Infrastructure Outsourcing, ADM Outsourcing and Bundling trends in ITO. Each category contains 4-6 key trends, which are discussed in detail (and illustrated with supporting data and analysis) to provide the reader with information in easy-to-apply, bite-size pieces. For example, the ADM segment of the ITO market is influenced by the following key trends:

• Diversity in buyer adoption: ADM activity is fairly diversified across geographies, industries and buyer segments, with North America remaining the largest signing geography
• Maturity of offerings: Traditional and offshore suppliers are approaching a similar level of market maturity, but traditional suppliers still have the edge in bagging large deals with Large Buyers (more than US$ 10 billion in revenue)
• Bundling: Only 27% of ADM deals are single-tower deals; bundling is extremely common in ADM. However, Application Maintenance is frequently sourced independently of other ADM activities