With smaller staffs, the companies flocked to Information Technology outsourcing vendors as the recession unfolded and the industry watchers expect more of the same as the companies seek to flash fixed costs and deliver services. From a new prospects, the pipeline for the leading outsourcers is strengthening as they get a lot of distress calls from a new prospects, they have not tracked a slowdown in the market yet. Among the top 20 outsourcing deals inked in 2008 reached $998 million and the average length exceeded six years, the market research firms reported that  the average contract size. The companies including the AT&T EDS and the Tata Consulting Service contracted multi year, mega deals in the year 2008 while the IBM signed multi year outsourcing contracts with the Whirlpool and Sara Lee the values of which were not disclosed.

In the fourth quarter, overall the IBM reported it has signed services contracts totalling $17.2 billion, including 24 greater than $100 million. The IBM was able to be quite bullish and quite confident on its positive guidance because of the outsourcing backlog. The others such as HP-EDS also enter 2009 with momentum. The IBM Global Services top challanger won five of the largest deals in the year 2008. Among the IT buyers, despute IBM’s contracts wins the company was actually absent from the list of the biggest deals, evidence of a different dynamic among the Information Technology buyers.

The global sourcing advisory firms TPI noted that megadeals those valued at more than $1 billion, peppered the first half of 2008 but tapered off into the second half as economic conditions worsened. Yet the number of the smaller, shorter-term deals increased. Mike Slavin, partner and managing director, CIO Services North America at TPI, the TPI continues to see overall total contract value size decrease which is a functions of shorter contracts durations and more discrete sourcing. The smaller deals over the fewer year show that the buyers are trying to address specific pain points.

For example, Gartner noted the customer in 2008 displayed growing focus on the green IT as it related to infrastructure outsourcing and the carbon footprint of the data center. The other infrastructure services such as the remote monitoring are also gaining buyer interest as companies look to reduce monitoring are also gaining buyer interest as the companies look to reduce costs via lower labor rates and reduce manual efforts. With the planned job cuts in January reaching a seven year high. The Information Technology services and the application resources, the Gartnenr says in 2008 software as a service and the cloud computing were among the top five alternative delivery methods that experienced accelerated adoption and are poised for the growth into 2009.

REFERENCE:

http://business.highbeam.com/409220/article-1G1-214585355/down-economy-fuels-outsourcing-trend-focus-shorterterm

http://www.computerworld.com.au/article/276695/down_economy_fuels_it_outsourcing/

http://www.techworld.com.au/article/276695/down_economy_fuels_it_outsourcing/?fp=4&fpid=242