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Go Bullish On Verticalisation of Service Offerings in Outsourcing, Recommends IDC

  • 08 June, 2005 10:13

<p>NORTH SYDNEY, June 8th 2005 – IDC's recent research finds organisations are inclined towards procuring vertically aligned service offerings. Overall, Australia businesses are experiencing growth and IDC predicts healthy growth in the IT industry for the remainder of 2005 and beyond. Increased business confidence and greater willingness to look at new IT projects are renewing momentum for spending that build the business across all vertical industries. The Banking and Finance sector was at the forefront of the total spending on IT outsourcing and accounted for 36.5% of the total spend in this market space.</p>
<p>IDC has recently released the results of its forecast for the Australian IT outsourcing services market by vertical industry. This report titled "Australia Outsourcing Vertical Market Analysis" researched the business issues and challenges faced in 2004 by organisations within the various verticals and presents a market sizing and forecast for spending on IT outsourcing within these vertical markets. A discussion on how these issues can manifest into opportunities for outsourcing has been included.</p>
<p>"For the most part, IT outsourcing does not need to be verticalised. The need to verticalise an outsourcing offering can be said to fall into an 80/20 rule - about 80% of an outsourcing offering is applicable to all vertical markets, and about 20% needs to be modified for the specific needs of a vertical market. This 20% alignment of the offering however will help the service providers to gain a competitive differentiation, which reinforces the fact that it is time for the service providers to restructure their offerings and have a vertical focused go-to-market strategy," said Aprajita Sharma, IDC Australia's Senior Analyst for Outsourcing and BPO.</p>
<p>"Historically the IT outsourcing market was comprised of a few large deals. This resulted in IS outsourcing activity being heavily dominated in certain verticals, while almost non-existent in others. This was emphasised when comparing the IT outsourcing vertical contribution compared to the broader IT market. In recent years IDC has observed the distribution of IT outsourcing activity becoming more evenly distributed across multiple industries. This has seen the variance between the segmentation of the broader IT market and the IT outsourcing vertical splits re-aligned. Despite this shift, today's IT outsourcing revenue still continues to be heavily dominated by three industries, namely finance, government, and telecommunications," added Ms Sharma.</p>
<p>IDC's highlights for 2004/2005:</p>
<p>* Factors such as improving customer service and exploiting existing markets more effectively is the priority for most organisations rather than investing in back office operations and asset based IT.</p>
<p>* The finance and communications verticals are leaders in technology adoption and the need to adapt to a rapidly changing business and market environment is fundamental to their level of outsourcing adoption as a business strategy. However this may lead to a slower growth rate as a result of the larger size and relative maturity.</p>
<p>To find out more about the study, or to purchase this research, please call the IDC sales team on (61 2) 9925-2226 or email Gary Clarke on gclarke@idc.com.</p>
<p>For press enquiries please contact:
Aprajita Sharma
Market Analyst, Outsourcing and BPO
Email: asharma@idc.com
Phone: 61 2 9925 2257</p>
<p>Click here to view the press release online:
http://www.idc.com.au/press/detail.asp?releaseid=165</p>
<p>Click here to subscribe to IDC press releases and newsletters online:
http://www.idc.com.au/newsletters/register/</p>

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