Industrialised cloud 'cannibalising' the outsourcing industry

Low cost business IT cloud solutions are cannibalising the IT outsourcing market, and by 2015 will have sliced around 15% from the earnings of the top outsourcing players, according to a new analyst forecast.

Gartner predicted that Industrialised Low-Cost IT Services (ILCS) was effecting the perceptions of the value of IT.

Similar to what happened with the adoption of offshore delivery, it will be incumbent upon vendors to invest in and adopt a new cloud-based, industrialized services strategy either directly or indirectly, internally or externally.

“The projected $1 trillion IT services market is at the beginning of a phase of further disruption, similar to the one the low-cost airlines have brought in the transportation industry,” said Gartner.

With economic and financial pressures mounting on many businesses, focus on cutting costs and driving efficiency was leading many organisations to increasingly turn to cheaper cloud storage options. In fact, predicted Gartner, by the end of 2016, over half of the top 1000 global companies will have stored ‘customer sensitive’ data in the cloud.

However, security still remains a key concern among enterprises flirting with cloud adoption; and Gartner predicts that organisations will increasingly expect vendors to provide proof of independent security testing via inspector certifications.

“This means that instead of requesting that a third-party security vendor conduct testing on the enterprise's behalf, the enterprise will be satisfied by a cloud provider's certificate stating that a reputable third-party security vendor has already tested its applications,” said Gartner.

These predictions came among a number of seasonal, forward-looking statements from the specialist IT analyst firm in its Gartner Predicts report, which also predicted that the ‘unusually aggressive’ competition in the social media space, both on enterprise and consumer social networks, was leading to a large number of vendors all offering services with overlapping features.

“In 2013, the investment bubble will burst for consumer social networks,” it said. “And for enterprise social software companies in 2014.”

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