Outsourcing's big three may tumble

EDS, CSC and IBM GSA have maintained their stranglehold on the IT outsourcing market, but their tenure may well be coming to an end, IDC has warned.

E-commerce, particularly in the business-to-business and small- to medium-size enterprise sectors, is "likely to prove significant for outsourcers as they seek to reshape existing market models and outsourcing service offerings", said Merv Langby, IDC's senior analyst for professional services.

"It is still too early to tell, but aspects of market behaviour . . . suggest the outsourcing market will begin to diversify and open up to a variety of specialist and niche providers, increasing the diversity of service options and market competition," Langby said.

The winds of change have already started to blow, Langby said, with smaller outsourcing organisations winning significant contracts, such as Advantra's recent win in the federal government's Cluster Five contract, Hewlett-Packard's fledgling service unit's win with Email Metals and Origin's deal with Orica.

However, the big three still accounted for 78 per cent of the local outsourcing market, valued at $2.3 billion last year, Langby said.

He said these organisations had "set the trend" for the local outsourcing market and had helped make the Australian market one of the most advanced in the world. However, they are not untouchable, he said.

IBM GSA's 1998 revenue was $830 million, EDS' was $710 million and CSC's was $211 million, according to IDC figures.

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More about AdvantraCSC AustraliaEDS AustraliaGSA GroupHewlett-Packard AustraliaIBM AustraliaIBM GSAIDC AustraliaOrica Australia

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