IDC: IS outsourcing to top $100 billion by 2005

Worldwide spending on IS (information systems) outsourcing will top US$100 billion by 2005, up from $56 billion in 2000, according to a recently released report from market researcher International Data Corp. (IDC).

The United States is the biggest market for IS outsourcing, and will account for 44 percent of global IS outsourcing spending by 2005, IDC forecast. Western Europe is the second-biggest market, with spending increasing 10.3 percent annually and expected to reach $26 billion by 2005. Among the fastest-growing regions is Asia-Pacific, with spending predicted to grow 20 percent annually between 2000 and 2005, IDC said.

The researcher attributed the market's steady expansion outside the U.S. to both growth in traditional segments and the increasing acceptance of outsourcing in untapped areas of Central and Eastern Europe, Latin America, Asia-Pacific, and Japan. Outsourcing is an increasingly attractive option for companies dealing with the complexities of deregulation, privatization, globalization, resource and personnel shortages, and economic downturns, IDC said.

While the traditional reasons for outsourcing -- reducing operating costs, improving IS flexibility, and increasing efficiency -- still drive the market, other factors are also leading companies to seek outside services. Companies are increasingly turning to outsourcing for strategic reasons, including creating partnerships, broadening infrastructure, extending operational reach, and keeping up with current technology, IDC said.

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