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21 Aug 12 Cloud Services Drive Fast-Growing Outsourcing Market

Source – Rachael King

Companies are turning increasingly to IT outsourcing as a means of supplementing and, in some cases, replacing internal hires. That’s especially true of application hosting. About 35% of companies say they’ll outsource more in this area during the next year to 18 months, according to a new report from global consulting firm Bluewolf. Cloud computing is partially driving this growth, as more companies use applications from the likes of Salesforce, Google and Workday.

Companies spend nearly half of their outsourcing budgets on application services including development, hosting and maintenance. Bluewolf predicts that as more companies rely on cloud providers, the outsourcing of applications will grow, whether it’s to providers who offer niche services or larger companies like Google or Microsoft.

The growth of cloud computing within the outsourcing market was also detailed in a Gartner report, released August 7. While it still represents just a fraction of the global IT outsourcing market, of around $251.7 billion in 2012, cloud computing services are the fastest growing segment of IT outsourcing worldwide, and are expected to grow 48.7% in 2012 to $5 billion, up from $3.4 billion in 2011, according to Gartner.

For Lien Chen, director for corporate IT at RAE Systems, a company that designs and manufactures gas and radiation detection systems, cloud services are a compelling alternative to using internal staff to oversee applications. The company currently uses Salesforce.com for customer relationship management, Eloqua for marketing automation and middleware from Informatica to connect Salesforce.com to its back-end Oracle databases.

Chen says she likes how quickly she can get cloud services up and running and how easy they are to maintain. When looking at new applications, whether on-premise or cloud-based, she compares features, functions and ease of use. “If everything is equal, at this point in time I would definitely go to the cloud,” she says.

Chen acknowledges that using cloud computing is technically considered outsourcing but she doesn’t think of it as outsourcing because she’s got much more control than if she outsourced an application to another country. “Outsourcing has a bad name,” she said, adding, “this is nothing but a platform difference.”

Whether you call it cloud computing or IT outsourcing, it’s growing. Quickly.

Reader's Comments

  1.    

    Cloud computing is the use of computing resources (hardware and software) that are delivered as a service over a network (typically the Internet). For example, email. The name comes from the common use of a cloud-shaped symbol as an abstraction for the complex infrastructure it contains in system diagrams. Cloud computing entrusts remote services with a user’s data, software and computation.,

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