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Phenomenal outsourcing growth no fluke, IDC says

Phenomenal outsourcing growth no fluke, IDC says

Despite the fact that outsourcing tendencies among Australian organisations have reached "phenomenal" levels since 1997, IDC Australia predicts that "outsourcing friendly" users such as banks, airlines, communications and insurance companies could again "spike" the market at any time.

In its report titled The Australian Outsourcing Market and Trends, 1997Ð2002, IDC found that the demand for outsourcing skyrocketed by 74 per cent in 1997 and the current year growth is projected to match that at 70 per cent.

And despite confirmation that such growth rates would be unsustainable in the long-term, IDC predicted a combined annual growth rate (CAGR) of 15 per cent between 1999 and 2002 and a combined CAGR of 24 per cent over the five-year period.

$12 billion since 1997

On closer examination, IDC found that Australian outsourcing arrangements have accounted for approximately $12 billion in revenue since 1997. Two of these arrangements, namely the Telstra/IBM GSA and Commonwealth Bank/EDS contracts, rated in the top 10 outsourcing contracts worldwide during that period.

"For a market that traditionally represents between 1.5 to 2 per cent of the world market, this can truly be referred to as a dramatic achievement," the report said.

According to the report, the "Big 3", IBM Global Services, EDS, and CSC continue to dominate the outsourcing market in contributing around 38 per cent of total 1997 revenues of $1.3 billion. IDC predicted that this domination would continue this year as the market reaches $2.2 billion.

However, IDC warned that traditional outsourcers might need to foster links with other service providers (IT and non-IT) in the coming years as they attack smaller market segments.

"Because of this factor, the next 2-3 year period will prove most revealing as the outsourcing market shapes its future."

The Australian Outsourcing Market and Trends, 1997Ð2002 report can be obtained from IDC Australia's Web site at www.idc.com.au.


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