Outsourcing's big three under threat

Outsourcing's big three under threat

Accounting for over 78 per cent of the Australian outsourcing market in 1998, the combined dominance of IBM Global Services, EDS and CSC may be pegged back, according to Merv Langby, senior analyst for professional services at IDC Australia.

"It is still too early to tell, but aspects of market behaviour covered by IDC's complementary outsourcing market reports suggest that the outsourcing market will begin to diversify and open up to a variety of specialist and niche providers, increasing the diversity of service options and market competition," said Langby.

Citing a growing market diversity and the moulding of business practices around e-commerce, Langby claims the pressure is mounting for the industry's three biggest players.

"In this context, the extent to which e-commerce is adopted by small-to-medium sized enterprises is likely to prove very significant for outsourcers as they seek to reshape existing, and create new, market models and outsourcing service offerings."

According to Langby, the SME market has remained largely untouched by outsourcing companies and provides a number of opportunities for service organisations.

"The most recent contracts reflect the increasing capacity of players other than the big three to compete effectively and attract outsourcing contracts of meaningful scope and value," said Langby.

IDC research positions Australia as the sixth largest outsourcing market in the world. It is likely to become the fourth largest in the next five years.

"Market mass carries its own internal momentum, signalling that the buying community has moved beyond the exploratory and early adoption stage and into a more growth-oriented phase," Langby said.

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