Today in Tech: Gartner's outlook on IT Outsourcing; Coopetition & Microsoft Surface

Gartner on IT outsourcing 2012

Gartner in its latest outlook, alludes to a big shift that's happening in IT Services outsourcing. Its press statement quotes Bryan Britz, research director at Gartner saying:

"Change is afoot in the AO market. The burdens of managing the legacy portfolio, along with the limitations of IT budgets, have shifted the enterprise buyers to be cautious and favor a more evolutionary approach to other application services, such as software as a service (SaaS). New applications will largely be packaged and/or SaaS-deployed in order to extend and modernize the portfolio in an incremental manner. While custom applications will remain 'core' for many organizations, the trend in the next few years to SaaS enablement in the cloud will reflect in the growth of the AO outlook."

What does this mean for Indian IT Services companies? It seems as if Cloud, an area into which many companies are still taking the first few cautious steps, will eat into traditional applications outsourcing segment faster than we think. (Incidentally, Infosys announced its new cloud solution yesterday.)

Here's a snapshot of IT Outsourcing market in 2012, as Gartner sees it Total IT outsourcing services: 2.1% ($251.7 billion)

Data center outsourcing: (-1%) (~ $85 billion)
Application outsourcing: 2% ($40.7 billion)
Cloud compute services: 48.7% ($5.0 billion)

Asia/Pacific: 1% in 2012 and exceed 2.5% in 2013.
Western Europe: (-1.9%)
North America: ITO to grow through 2016.

Acer on Microsoft's Surface

The term Co-opetition is hardly new in the world of business. For a long time, managers have cooperated with other companies in some areas, and fiercely competed with them in others. It’s largely seen as a positive for an industry as a whole.(Here’s a presentation by Barry Nalebuff, an Yale professor, who has written a book on the subject.)

The term was invoked recently when Microsoft announced Surface tablets. It meant, on the one hand, Microsoft would supply operating systems to hardware makers, and on the other, it would be competing with them on tablets market. Microsoft knew this would lead to tension, and the first company to come out open on this was Acer.

This is what Acer’s chairman and chief executive JT Wang had to tell Financial Times: “We have said [to Microsoft] think it over. Think twice. It will create a huge negative impact for the ecosystem and other brands may take a negative reaction. It is not something you are good at so please think twice.”

Interestingly, Apple is also locked in a duel with one of its vendors-cum-competitor, Samsung.

Apple's reliance on Samsung chips for its best-selling phones and tablets will be worth as much as $7.5 billion to Samsung this year, a 60 percent jump from 2011, research firm Gartner Inc. estimates. Because Apple would struggle to find an alternate supplier for the main processor in its mobile devices, the computer maker can't quit buying from its competitor anytime soon, whatever the trial's outcome. [more]

Also of interest

• Accura Infotech in talks with PE firms to raise up to Rs.200 crore: Mint
• NPR asked to not set up camps till UIDAI finishes ‘majority’ of work: Mint
•  HTML5 – Maturing Desktop Browser Support Opens the Door to Enhanced Commerce Experiences: Forrester
• Google’s self-driving cars have logged more than 300,000 accident-free miles: BGR
•  One on One: Steve Mann, Wearable Computing Pioneer: Bits, NYTimes
• Apple freezes AppleID password resets requested over the phone: CNet
• Facebook's Latest Mobile Ad Product Advertises Other Apps: Fast Company
• Google Slaps $100M Golden Handcuffs On Wildfire To Retain Employees After $350M Acquisition: Tech Crunch

The thoughts and opinions shared here are of the author.