E-mail Outsourcing Is on the Rise, Study Shows

FRAMINGHAM (03/23/2000) - Outsourcing of corporate messaging services appears to be picking up steam, but few companies are committing their entire infrastructure to outsourcing, according to a new survey.

A study by Creative Networks in Palo Alto shows outsourcing of e-mail services among Fortune 500 and Forbes 100 companies is up nearly 14 percent in the first quarter of this year compared to the last two quarters of 1999. The number of companies that manage their primary mail systems in-house shrank to 81.5 percent from 95 percent in the same time frame, according to the consulting firm's quarterly Track IT market research survey.

According to the survey, 18.5 percent of the 60 corporations surveyed now use a hybrid in-house/outsource model to manage their corporate e-mail systems.

"Organizations are finding they need to do e-commerce, portals and knowledge management, and there is not enough IS staff to go around," says Mike Osterman, an analyst at Creative Networks. "Messaging is not the top [return on investment] anymore."

Points to ponder

But the outsourcing trend does come with a few caveats. Few corporations are completely turning over their e-mail infrastructure to outsourcing firms.

Instead, they are adding to their existing infrastructure with outsourced services such as virus scanning and calendaring, or to support subsets of users, such as mobile workers.

Recent reports also show that outsourcing options are not swaying users from purchasing enterprise-class e-mail systems such as Lotus Notes and Microsoft Exchange. Both of those client/server e-mail packages just had record quarters for sales, posting 8.5 million and 5.5 million new seats, respectively, according to the Web-based newsletter "Messaging Online."

Outsourcing takes flight

Late last year, United Airlines became the first major corporation to commit its entire e-mail infrastructure to an outsourcer when it cut a deal with USA.net that could eventually include 100,000 mailboxes. United said it needed a way to support its employees, who by nature of the airline business are highly mobile. USA.net provides encrypted mail, junk-mail blocking, virus scanning, e-mail forwarding and calendaring.

Enterprises with more sed-entary staffs also appear to be looking to outsource some of those services but in a more a la carte fashion.

"You don't see major corporations abandoning their e-mail infrastructure, but they are beginning to seek outsourcing to handle things like remote mail and calendaring," says Eric Arnum, editor of "Messaging Online."

Nearly 45.3 million seats of Web-based or hosted e-mail are in use today, Arnum says. In the fourth quarter alone last year, 9.4 million mailboxes were opened among the top four e-mail outsourcing companies - USA.net, Critical Path, Mail. com and CommTouch. Most of those, however, were not corporate mailboxes.

"These firms are still in foot-in-the-door mode. They aren't getting entire companies to outsource: They're getting divisions and bits and pieces," says Arnum. The real outsource push, he adds, may come with unified messaging, which can deliver voice, fax, and pager messages into a single in-box.

A study last year by Gartner Group in Stamford, Conn., showed that through 2002, unified messaging will be a major factor in 30 percent of messaging outsourcing decisions.

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