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Cloud-based Services Outsourcing Deals on the Rise


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November 26, 2012

Cloud-based Services Outsourcing Deals on the Rise

By Mae Kowalke, TMCnet Contributor

Cloud services are in the ascent, and the number of global IT service deals in the past few years confirms the trend.

Global IT services deals that have a cloud element have risen dramatically in the past three years, according to Information Services Group (ISG), an outsourcing consultancy.

This year, 300 IT outsourcing contracts were awarded that featured cloud computing services, ISG found. This compares to 110 in 2010 and 2020 in 2011, reported an article in Computer Weekly. It used its TPI index to analyze IT outsourcing deals.

ISG uncovered that one of the cloud computing trends is toward standardized platform-based services that are less customizable than outsourcing offerings in the past.This is a big change for the IT sector, where customization is a big part of IT outsourcing.

 “Cloud services, especially shared platforms, are a new terrain for providers and clients alike, as they are highly standardized and can’t be easily customized — the antithesis of traditional outsourcing,” said ISG analyst Stanton Jones, in a statement.

Software-as-a-service (SaaS (News - Alert)) for human resources, customer relationship management and collaboration are where the greatest growth potential lies, according to Jones. Infrastructure-as-a-service will lag behind SaaS in enterprise adoption.

“From well-known software vendors to more nimble mid-market players and emerging pure-play infrastructure and SaaS providers, traditional IT service providers face significant pressure in nearly every direction,” he added.“Clearly, cloud is a disruptive trend in the enterprise and we predict this disruption will not only continue, but accelerate, especially for the traditional IT service providers.”

There are several reasons why companies are migrating to the cloud, of course. Scale, cost savings, convenience, innovation and flexibility are just a few of the reasons why enterprises might consider a cloud-based approach.

BG Srinivas, global head of financial services at Indian IT services firm, Infosys (News - Alert), also said the move toward the cloud has a lot to do with the need for flexible ways to pay for services after the financial challenges in the market the past five years.

There has been a lot of interest from Infosys customers for a cloud-based services platform, he noted. Infosys has a range of Edge products that currently are delivered through a private cloud. They are designed as a service for a particular part of a business.

According to recent research based on IT buyers carried out by Computer Weekly, businesses in North America have outsourced roughly 18 percent of their cloud development. The number is higher in Europe, where roughly 21 percent have outsourced cloud development.

Want to learn more about cloud computing solutions geared specifically towards small to medium-sized businesses?  Don’t miss the Cloud4SMB Expo, collocated with ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at Cloud4SMB Expo. Follow us on Twitter.

Edited by Jamie Epstein

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