18/02-04   -   Pressmeddelande

Outsourcers Target Nordic IT Market but Very Few Will Succeed, Says IDC

Outsourcing is one of the hottest areas in the IT market, and suppliers from various origins are turning to the market; but far from all of them have the foundations for success, and several will fail. A lot has been written about how companies increasingly outsource IT systems to external partners and how IT outsourcing is one of few areas in the IT industry to display significant growth recently. There has been very limited focus, however, on the changes that inevitably follow.

Nordic IT outsourcing is worth more than €4 billion and rapidly growing. It is expected that outsourcing will make up nearly half of the total IT services market in just a few years. Obviously, other IT services categories suffer — particularly system integration and other project-related services. Though IT is becoming increasingly standardized, it is by and large the same functions that are carried out. Outsourcing is merely a new contract and delivery form that sets new requirements and challenges for the suppliers, and it is becoming increasingly important to offer complete solutions — if necessary by using sub-suppliers.

Moreover, the distribution of the needed hardware and software is heavily affected. As outsourcing suppliers own the IT system, it isn´t the end user that buys or even determines what hardware is to be used — i.e., the outsourcing supplier becomes the actual customer. Due to their large purchasing volumes and technical competencies they will push prices down additionally and the possibility of selling add-on services and so on will be negligible. The channel will without doubt feel even more pressure, and the traditional model with manufacturer, distributor, and dealer will face even more difficult times as both distributor and dealer function as "box-movers."

Outsourcing is a lucrative market that threatens existing IT suppliers. Therefore, several players are directing their focus on IT outsourcing to take their share of the growth. Very few, however, have the foundations to succeed. In the coming years, we will surely experience several failed attempts by manufacturers and dealers to enter the market.

In the new study, Reshaping IT Markets? The Derived Effects of Outsourcing (IDC #N520410L, February 2004), IDC stresses that regardless of how attractive the IT outsourcing market seems right now, companies should be highly cautious about offering outsourcing services. Though the market is undergoing radical changes, it is by and large the very same products and tasks that comprise an IT project. It is therefore very important for companies to focus on their own competencies and from those assess how they can add actual value to the outsourcing value chain.

To purchase this document please contact one of the following:
Denmark, Andreas Lange, +45 39 16 22 43
Norway, Sweden, and Nordic, Pelle Hallberg, +46 8 751 0415
Finland, Pipsa Ylä-Mononen, +358 9 8770 4654
Alternatively, please visit www.idc.com.

About IDC
IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a subsidiary of IDG, the world´s leading technology media, research, and events company. Additional information can be found at www.idc.com
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For more information:
Anders Elbak
+45 39162222
aelbak@idc.com