Cost cutting may spur IT outsourcing deals

Cost cutting may spur IT outsourcing deals

The cooling economy may prompt firms to outsource more IT for cost-cutting reasons, according to analysts. But technology users said the economy hasn't had much impact on their outsourcing decisions yet.

Though an outsourcing deal doesn't automatically guarantee cost savings, users will examine their IT budgets more closely and shift their priorities to put cost cutting among the top drivers for any technology decisions they make, said Lew Hollerbach, an analyst at Aberdeen Group.

According to a survey of 150 American and European companies released last month by analyst The Conference Board, cost cutting was the top benefit of outsourcing, cited by 39 per cent of respondents. Having access to experts came in second among respondents, with 38 per cent.

"In boom times, outsourcing tends to be focused on time-to-market issues, and in down times focused on cost savings and restructuring," said Peter Bendor-Samuel, CEO of The Outsourcing Center, another [US-based] consultancy.

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