IT outsourcing set to rise - Datamonitor

IT outsourcing set to rise - Datamonitor

Investment in IT outsourcing by European financial firms is set to grow by 27% between 2002 and 2005, according to a report by market analyst Datamonitor.

Datamonitor predicts that European financial services spend on outsourcing will total $12.4bn in 2005, up from $9.7bn in 2002.

Infrastructure outsourcing represents 56% of the total market and is the most developed segment, while offshore outsourcing has boosted the application outsourcing sector.

According to the report, BPO will be the fastest developing sector and will grow by over $1.2bn from 2002 to 2005, a compound annual growth rate (CAGR) of 10.5% compared to 7.5% and 7.8% for infrastructure and application outsourcing respectively, over the same period.

Anders Maehre, financial services technology analyst, Datamonitor, says the scope for BPO services in European financial services is virtually untapped but adds that it will be up to technology vendors to make the advantages of outsourcing clearer to firms, many of which remain sceptical.

He says: "BPO will therefore fail to deliver on its potential if the BPO business proposition does not achieve higher levels of acceptance in the industry."

Datamonitor adds that firms will be more accepting of outsourcing services provided internally, like policy administration, rather than key administrative and management support areas such as finance and HR.

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