NORTH SYDNEY, January 8th 2007 - (IDC's recent research finds cost savings the number 1 driver for outsourcing. Strategic IT direction was rated number 1 in 2005)

IDC has released the results of its 2006 Australian Outsourcing End-User Survey. The report titled: An Inspection of Spending Priorties for IT Outsourcing in the Australian Market: Myth, Rumour and Reality, researches the user preferences and needs for IT outsourcing services and the expectations of organisations looking at procuring these services in the near future.

"As A$7 billion comes up for renewal within outsourcing in 2007, Service Providers (SPs) are revisiting and redefining their positioning strategies to address market opportunities. Some large contracts are expected to go the selective sourcing way as organisations look at un-bundling some of their whole IT contracts and consider best-of-breed providers," says Aprajita Sharma, IDC's Research Manager for Outsourcing and BPO.

"Tier 1 outsourcing providers IBM, EDS, CSC and HP will grapple with a dynamic and competitive environment, facing tough competition from the Tier 2 providers and the Indian offshore providers. Added to this mix for Tier 1 providers will be the dilemma of how to balance profitability and productivity imperatives with optimising performance to the customer for long-term growth and market advantage. With this in mind, it is increasingly important to maintain the customer base and focus on longer term account profitability," added Ms Sharma.

IDC key findings:

# Though Australia is the most mature geography in Asia/Pacific in terms of procuring outsourcing services, there is still a huge untapped potential in the country, especially in the SME segment, which constitute 98.8% of the total market.

# The average contract size of most of the outsourcing contracts continues to range from 3–5 years with companies looking at a contract renegotiation after the tenure.

# Network management has significant penetration rates but remains a priority for many organisations across all segments in 2007.

# The largest demand for desktop management on the other hand, is most likely to arise from the banking/insurance/financial services vertical.

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For press enquiries please contact: Aprajita Sharma Research Manager, Outsourcing and BPO Phone: 61 2 9925 2257 Email: asharma@idc.com

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If you would like further information or to purchase IDC research, please contact Gary Clarke, IDC Associate VP of Sales via email gclarke@idc.com or phone 02 9925 2226.

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