IS outsourcing to top $100b by 2005

Worldwide spending on information systems outsourcing will top $US100 billion by 2005, up from $56 billion in 2000, according to a recently released report from market researcher IDC.

The US is the biggest market for IS outsourcing, and will account for 44 per cent of global IS outsourcing spending by 2005; in Western Europe spending will increase 10.3 per cent annually to reach $26 billion by 2005. Among the fastest-growing regions is Asia-Pacific, with spending predicted to grow 20 per cent annually between 2000 and 2005, IDC said.

By 2005, Australia will spend $5.14 billion on IS outsourcing, up from $2.95 billion in 2000 - a growth rate of 11.7 per cent, according to IDC Australia senior analyst for services research Kathy Benson.

Outsourcing is an increasingly attractive option for companies dealing with the complexities of deregulation, privatisation, globalisation, 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, keeping up with current technology and overcoming the skills shortage, IDC said.

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