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SMEs in Dilemma about Jumping on to the Outsourcing Bandwagon, Says IDC

  • 13 January, 2005 12:53

<p>NORTH SYDNEY, January 13th, 2005 – IDC's recent research finds 'loss of control' as the biggest perceived inhibitor for outsourcing IT services within the SME (Small and Medium Enterprise) market segment. IDC has just released a report titled "Outsourcing and the SME – Understanding the SME Demographic" which researches the drivers, inhibitors and perceptions towards outsourcing in the small and medium business segment in Australia based on the results of the 2004 Outsourcing survey.</p>
<p>"Though most of the large service providers have their eyes set on the SME market, outsourcing has not taken this marketplace by storm the way it has taken elsewhere. This is a place where business lives and dies on trust and relationships and thus vendors will face tough challenges in market penetration," said Aprajita Sharma, IDC Outsourcing and BPO Analyst.</p>
<p>A mature and sophisticated channel strategy is likely to succeed in this market as the channel partners have the reach, the brand, the relationship and an already installed base of customers within this segment.</p>
<p>"The good news is that the SME segment shows a very positive business outlook, with only 5% of mid-market companies expecting their sales performance to decrease by some degree for the next 12 months - in contrast to a significant number expecting growth of 10–20%," added Ms Sharma.</p>
<p>IDC's report highlights areas where the most demand within outsourcing will come from within the SME segment, and offers suggestions to service providers and organisations about defining their positioning strategies for this segment of the market. A comparative analysis has been presented for the small, medium and large market segments to understand their different business dynamics and drivers. IDC defines small businesses as those with 1-99 employees, the mid-sized businesses as those with 100-499 employees and large organisations as those with 500+ employees.</p>
<p>Some key findings are:</p>
<p>* SMEs are realising that the break-fix approach is not the long term solution to their IS management problems and their objective should be to free up resources for focus on their core business if they need to be competitive.
* It is important for the service providers to wear the SME mask and mirror their methodologies of conducting business if they want to succeed in the market. This is where IDC believes a robust channel strategy needs to be defined.
* The biggest challenge for service providers will be to get the SMEs to overcome the fear of loss of control.</p>
<p>To purchase this study, please call the IDC sales team on (612) 9925-2226 or email Gary Clarke on</p>
<p>Subscribe to IDC press releases and newsletters online at</p>
<p>For press enquiries please contact:
Aprajita Sharma
Market Analyst, Outsourcing and BPO
Phone: 61 2 9925 2257</p>

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