IDC Research Shows Multinationals Prefer Selective Approach to IT Outsourcing
Equant revealed key findings of IDC research on IT outsourcing trends during its "Strategic Sourcing for Communications" event, held today in Geneva and attended by senior executives from top multinational companies.
Commissioned by Equant, the research was conducted during Q3 2004 in Europe, North America and the Far East among CIOs and CFOs from more than 300 of the world's largest multinational corporations.
The IDC research reveals that 64 percent of CIOs and 77 percent of CFOs are positive about selective IT outsourcing, but over three-quarters of board-level IT and finance directors would not want to outsource their IT in its entirety. Managing risk is the key concern. The most popular part of an IT function to outsource is the network/communications infrastructure (50%), followed by security services (32%) and server management (32%).
When selecting an outsourcing provider for the network/communications infrastructure CIOs rate telecommunications specialists highest (54%), followed by generalist IT companies (32%) and then local outsourcing providers (14%). They typically entrust their communications infrastructure to a specialist in order to drive down costs and focus on core business functions.
"Our IT sourcing strategy has been consolidated around one main IT provider and Equant as communications provider," said Michael Paravicini, chief technology officer at Zurich Financial Services. "We believe this is an effective compromise between risk management and the critical size of every individual project. The initial scope of our telecoms and network suppliers was highly fragmented," continued Michael Paravicini. "With one main communications provider today, we have saved considerable time and money."
Of the organizations polled in the research, 72 percent had already outsourced certain elements of their IT. The most common benefit, cited by a quarter of the CIOs interviewed was the ability to focus more on core business functions.
"When it comes to IT infrastructure and services, this research indicates that most multinationals are less enthusiastic about IT outsourcing mega contracts," said Duncan Brown, Consulting Director at IDC. "Most CIOs demonstrated a very pragmatic attitude to the outsourcing of certain elements of the IT infrastructure. In particular, most respondents were very open to outsourcing the management of the communications infrastructure to a specialist in order to help them focus more on core business functions."
"We see an increasing enthusiasm for communications infrastructure outsourcing as part of this selective IT sourcing approach," said Michel Picaud, senior vice president, Equant Solutions and Services. "This trend is reflected by a surge in demand for Equant's outsourcing services from multinational customers. Our outsourcing business revenues have more than doubled in the first half of 2004, and this year we have signed new contracts directly and through France Telecom. Our customers, such as JTI and Zurich Financial Services, are satisfied and we are progressively increasing the scope of our business relations."
Source: press release
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