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March 26, 2008

Research Analyzes Shifts in Australia Outsourcing Market

By Susan J. Campbell, TMCnet Contributing Editor

The contact center outsourcing industry has shown significant growth throughout the world in the past few years, indicating that companies are seeking a more customer-centric approach, yet lack the desire to maintain operations in-house. And, despite the controversy that it can cause, offshore outsourcing continues to lead this growth throughout the world.

Although growth is evident throughout the global market, there are also markets that are experiencing other shifts. A recent IDC (News - Alert) study revealed specific shifts in the outsourcing market in Australia. Companies are making agreements with the future in mind, strategizing to create leverage through price benchmarking, claw-back and blue-sky clauses. Analysts warn however, that such strategies can backfire in the long run.

This contract trend is driven primarily by the need for flexibility to redefine the contract and minimize the risk. IDC advises customers that they must keep in mind that short term selective outsourcing contracts with blue-sky clauses may provide the desired flexibility within the scope of services, but will prove to lack the competitive pricing edge when compared to traditional outsourcing contracts.

"Despite the prevalence of this multi-sourcing trend, the traditional outsourcing suppliers like IBM (News - Alert), EDS, CSC ended up signing longer term highly bundled multi-tower contracts in 2007,” said Aprajita Sharma, research manager, Outsourcing and BPO, IDC Australia, in a company statement.

“The increasing trend towards Remote Infrastructure Management Outsourcing (RIMO) was evident in its convergence with traditional infrastructure outsourcing, with majority of the contracts involving some elements of the mix delivered from offshore locations, primarily India."

In its research, IDC also found that security issues with revealing internal processes have become bigger issues with organizations in 2007 compared to the previous year; respondents considered “solid communication” to be of the highest importance within an outsourcing relationship; and the overall results indicate a high level of activity within the applications maintenance/management and development space in large organizations.

“IBM managed a sweeping victory over its competitors when it came to ranking customer perception of being a leading outsourcing player. IBM has reinforced this with some high profile strategic deals signed with National Australia Bank, Commonwealth Bank and others within the Government segment," Sharma added.

”In the Mind of the Outsourcing Customer: IDC’s Annual Outsourcing Survey, 2007” is the culmination of IDC’s research which gathers user preferences and needs for IT outsourcing services and the expectations of companies considering such services in the future.

While exactly predicting the future of the outsourcing market is a long reach, many organizations are trying to control their future by negotiating contracts that will work in their favor. And, while there is some risk involved with this method, the demands of the industry may require nothing less.


Susan J. Campbell is a contributing editor for TMC (News - Alert) and has also written for To see more of her articles, please visit Susan J. Campbell’s columnist page.

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