Cost Savings Drive Mid-Size Firms to IT Outsourcing - IDC

A survey conducted by IDC suggests that the pressure to cut costs is forcing medium-sized companies to outsource their IT operations. The survey found that 48 percent of firms have already outsourced their desktops and 39 percent have outsourced their data center.

Seventy seven percent of the respondents stated cost savings to be the key reason for outsourcing operations. Seventy percent of the respondents believe the ideal outsourcing deal length to be between three to five years.

Respondents also favored tough penalties for supplier failures. Almost half of the respondents said that the outsourcer should pay three times the annual contracted revenues as compensation.

The survey also notes that while the mid-size companies are increasingly looking at IT outsourcing, they are still apprehensive of full BPO. Majority of the respondents perceive the procurement cycle for BPO to be too long. Further, 60 percent respondents believe that they would only pursue BPO, if there were guaranteed cost savings of at least 10 percent.

The survey was conducted among 46 senior finance executives and CFOs at UK companies with revenues between USD 100 million and USD 1 billion

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