The Information Technology research and advisory firm Gartner, Inc. it is recently released the study titled the potential impact of the economic downturn on the Information Technology Infrastructure Outsourcing prices, this reveals the IT outsourcing reveals IT outsourcing services that will drop by 5 percent to 20 percent through 2010. The reasons for the price reductions are the recession which is affecting markets worldwide, the IT budget constraints and the cost focused contract renegotiations, along with the other emerging forces. They all know that the prices is one of the reasons if not the reason why the companies outsource business functions. The global economic slowdown, the companies have learned to compared and bargain for a more reasonable contract price.
The companies scour for an outsourcing partner, traditional and a new offshore providers fiercely compete over the pricing while trying to keep their revenue growth on target. The companies used the outsourcing providers strength as their weakness. Regardless of the relative strength of the outsourcing during a recession, most of the clients are reporting intense discussion with their vendors and renegations of the contracts for Terms and Conditions Service Level Agreements. The items are under scrutiny to identify satisfactory concessions to further reduce the cost of the service on a case by case basis. The channel Register interprets that Gartner is not saying that will be an across the board reduction in the outsourcing contract prices. This is saying that for the new contracts and for tough customer who are up for the renewal and who are willing to shop a deal around outsourcers are having to make price concessions.
To the edge, the Gartner warns offshore providers and their clients to be careful not to push each other. They will end up being bitter on the outsourcer end and bitter on the customer side. On the Gartner’s study, they well known globalization and the outsourcin g writer shared an interesting perspective on Gartner’s study. It is true that times are hard but there is still plenty of the opportunity out there for those who are offering a high quality at a good price. What they are witnessing is the death of the mega margins and hyper growth. For the companies, speaking of offering value to customers, looking for an offshore provider is more like shopping for a bargain. They are looking for vendors capable of the delivering quality results and break monotony by innovation at a much lower price.
REFERENCE:
http://www.blog.infinit-o.com/outsourcing-projects-costs/
