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Outsourcing Demand Still Strong
A fresh forrester survey indicates that outsourcing demand in the consultancy and systems integration services are increasing.
Forrester, as it does with every sizing forecast, starts with a survey asking end users about their plans for outside help. This year, they found that project demand is increasing across the boar, almost. Compared with 2004, the demand for consulting and systems integration services increased or remained stable for almost every type of service. The biggest increase came for business process change/re-engineering work-34 percent of the respondents plan to buy that service in 2005, compared with 24 per cent in 2004. The biggest dive comes for architecture design/planning-dropping to 18 per cent of respondents this year, as against 31 per cent last year.

Continuing trend
Industry expertise and domain knowledge remain the top two hiring factors. When hiring a provider for a consulting or systems integration project, respondents said that knowledge of their own business or industry was critical, as was domain knowledge of the project work. Price remained the third choice.

Outsourcing demand still looks strong. Clients continue with their plans to outsource in 2005, as they have done in previous years. The demand for all types of hardware outsourcing dropped slightly from last year, white applications outsourcing of all flavors rose slightly. The top three options for outsourcing-ongoing new development work, individual applications, and telecom network remain the same from last year.

Application outsourcing places domain expertise first. Even more so than project work, respondents, who were hiring applications outsourcing providers, chose domain expertise as their top decision criterion, with price ranked second and industry expertise third. Meanwhile, hiring criteria for infrastructure outsourcing is still focused on price. Unlike the other two categories, respondents still report price as their top decision factor, with industry knowledge coming next.

Stabilized rates
Rates have stabilized. Two years ago, rates were still dropping, but this year the research indicates that time and material rates have stopped falling. They are even increasing slightly for consulting and systems integration. Forrester also believes that the increase in certain consulting rates is driven by a few practices, not a wholesale improvement in consulting or systems integration across the board. Clients buying services like process change, SAP implementation, compliance and risk management are likely to pay higher rates than those purchasing IT strategy or CRM implementation, given that these services are less in demand.
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Posted on : 19/11/2005
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