Gartner Says Service-Led Solutions Will Displace Traditional Sourcing Approaches Through 2015; IT Service Providers Must Bridge Legacy Offerings and New Services

(M2 PressWIRE Via Acquire Media NewsEdge) STAMFORD, Conn. -- The drive of organizations toward increased standardization of infrastructure, applications and business processes, combined with expanding and more comprehensive provider ecosystems, shows that service-led solutions will displace traditional sourcing approaches through 2015, according to Gartner, Inc. To remain relevant, IT service providers must bridge legacy offerings and new services based on new technologies, new delivery models and new architectures.

"The IT services market plays a key role in bridging legacy offerings and new cloud delivery paradigms. IT services providers able to adapt to change, improve competitiveness and identify growth opportunities will thrive," said Eric Rocco, managing vice president at Gartner. "Growth opportunities certainly exist for service providers with life cycle solutions in relation to the Nexus of Forces (cloud, social, mobile and information). However, this requires IT services providers to adapt to significant changes, including the growing influence of business leaders in technology investment decisions." Gartner predicts that the overall IT services market will grow 5.2 percent in 2013 and continue strong growth through 2016. Growth will largely come from changes and opportunities brought on by the Nexus of Forces and newer delivery models, although not exclusively in the consulting and implementation segments.

Segments will not grow uniformly. Hardware support and software support are among the lower-growth opportunities in the IT services market while cloud-based Infrastructure as a Service (IaaS) and business process as a service (BPaaS) are growing strongly at 13.1 percent and 47.3 percent, respectively, in 2013. Agility, not cost, will be the primary reason that many organizations adopt cloud computing. Hybrid IT environments will dominate client IT architectures through 2016, underscoring the importance of skills in the old-world legacy environments as well as the new world "as a service" operating models.

"The big squeeze is on for early IT services providers to achieve sustainable value-based differentiation," said Mr. Rocco. "This challenge is prominent in a time when economic uncertainty persists to the point of being essentially a certainty in its own right. Providers must be recognized by clients for delivering tangible business improvement to alleviate the cost reduction pressure, or they simply won't prosper or ultimately survive." With this in mind, Gartner has identified three recommendations for IT service providers in 2013: Stop undifferentiated bland marketing messages. Cost reduction focus ignores opportunities to improve the business. Emphasize business value and modernization/extension to transform clients' existing operations. Differentiate using value. Reinforce with references, and in doing so establish credibility and build trust to grow relationships with business buyers. Pricing models must also reflect the value being impacted. Providers must evolve unit-based pricing to outcome-based and value-based pricing.

Reinvent the service portfolio. Restructure the portfolio of services delivered to heighten focus and impact. Asset-based and Internet Protocol-based service offerings are critical elements of future competitiveness. Assess, prioritize and invest in productizing of existing IP assets. Modernize service delivery factories as fast as possible. Promote the value of process enhancement technologies and services (PETS) to your business process outsourcing (BPO) clients.

Determine if your business model is based on scale or specialization. Services themselves will continue to commoditize. Not all providers need to be business transformation enablers, but only providers focused on operational efficiencies driven by scale and cost discipline should bother committing longer term to services that are clearly more mature and rapidly commoditizing, such as segments of the infrastructure outsourcing marketplace. Gartner research suggests it will be increasingly difficult for scale-based business models and highly specialized, higher-margin business models to successfully coexist within the same provider.

"Thriving, let alone surviving, in these conditions is equally challenging for established market share leaders, as it is disruptive for new entrants," said Mr. Rocco. "Specialized skills, global delivery, verticalized service portfolios and satisfied customer references have formed the foundation of success for IT services providers in a competitive market. Nevertheless, these critical success factors are growing more complex and demanding. The strategic decision to build future value through scale or through specialization is now the paramount determination that faces all IT service providers." More detailed analysis is available in the report "The Gartner Scenario for IT Services Providers: The Future of IT Services." The report is available on Gartner's website at http://www.gartner.com/resId=2355415 .

More information on IT services and outsourcing trends and strategies will be provided at the Gartner Outsourcing & Strategic Partnerships Summit, September 9-10 in London, U.K., and September 23-25 in Orlando, Florida. Details on the London Summit can be found at www.gartner.com/eu/outsourcing . Members of the media can register for this event by contacting laurence.goasduff@gartner.com . Details on the U.S. Summit can be found at www.gartner.com/us/outsourcing . Members of the media can register for a press pass by contacting janessa.rivera@gartner.com .

Information from the Gartner Outsourcing & Strategic Partnerships Summits 2013 will be shared on Twitter at http://twitter.com/Gartner_inc using #GartnerOUT.

Contacts Janessa Rivera Gartner janessa.rivera@gartner.com Rob van der Meulen Gartner rob.vandermeulen@gartner.com About Gartner Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner in over 13,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 5,500 associates, including 1,400 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com .

Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.

((M2 Communications disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.com on the world wide web. Inquiries to info@m2.com)).

(c) 2013 M2 COMMUNICATIONS

[ Back To Business Process Outsourcing Homepage's Homepage ]

FREE Business Process Outsourcing eNewsletter: Click here to receive your targeted Business Process Outsourcing Community eNewsletter.

Subscribe Now ›

Knowledge Center

Case Study - Airline
This Fortune 500 Airline Client took its current form when it came out of Chapter 11 protection and merged with another airline in September 2005, and now ranks among the largest U.S. airlines today.

Industry Profile - Travel & Tourism
Due to the emergence of low-cost providers and other competitive pressures, today's travel and tourism companies face declining margins and waning customer loyalty. To survive and excel in this marketplace, airlines, tour operators and hotel chains must find ways to maintain the caliber of service their customers expect - while keeping operating costs under control.

Solution Profile - Online Solutions
For the most part, tech-savvy consumers appreciate the benefits of 24/7 Internet self-service. But sometimes they have a need or concern that requires the human touch.

View All ›

Featured Podcast

7 Steps to Creating a Powerful Teleprospecting Engine
When was the last time you performed an audit on your telesprospecting process? Putting actionable strategies in place will convert teleprospecting from a tactical afterthought to a strategic asset.

Come learn as SiriusDecisions discusses insights from their 2012 Teleprospecting Study.

Hosted by Jeff Farr, Vice President B2B Solutions, with our Special Guest Speaker, Jason Hekl, Research Director, SiriusDecisions.

Listen Now ›

Featured Solution

Social Media Solutions Overview
Your Consumers Are Talking. Are You Listening? People today are increasingly using the Web as a platform for sharing their buying experiences, both positive and negative.

Learn More ›

Press Releases

Alorica Wins Large Employer of the Year Award
Durant, OK (March 27, 2013) Alorica, (www.alorica.com), a leading provider of customer management outsourcing solutions, announced today they were the recipient of the Large Employer of the Year Award in Durant, OK. Currently, Alorica employs over 500 in the Durant community and is projected to hire more. The company was selected by the Durant Area Chamber of Commerce due to the positive economic impact they have had in the local area and because of the extraordinary efforts in the community through volunteer hours and charitable contributions.
Alorica strengthens presence in Cebu, creates jobs
Makati, Philippines (March 17, 2013) Alorica (www.alorica.com), a leading provider of customer management outsourcing solutions, expands its Philippine operations in Cebu City as part of the company's continued geographic expansion initiative to increase its presence in key growth markets and support in global growth strategy. With more than 40 US domestic, near shore, and offshore customer management centers, Alorica is actively strengthening its ability to provide high-value solutions to its clients in the fastest
growing business process outsourcing markets in the world.

View All ›

About Alorica

Alorica is a leading Business Process Outsourcing Provider of customer management solutions spanning the entire customer lifecycle. From customer acquisition and sales, customer care and support, supply chain and fulfillment, to social CRM and mobile, Alorica offers a seamless customer experience across all service channels. Alorica's award-winning Business Process Outsourcing services span both the Business-to-Consumer (B2C) and Business-to-Business (B2B) sectors across all industries for Fortune 1000 companies. Headquartered in Irvine, California with over 20,000 employees in over 40 domestic, near-shore, and offshore customer management centers, Alorica believes in creating opportunities for its clients, people, and in its communities. For more information, please visit www.alorica.com.

Featured Awards & Recognition

With a long history of providing outstanding results for our teleservices clients, Alorica has been honored with numerous awards and recognition. We are proud to share some of our most recent accolades with you.