Worldwide IT Outsourcing Services Spending To Surpass $251 Billion In 2012: Gartner

According to a latest report by Gartner, worldwide spending for IT outsourcing (ITO) services is on pace to reach $251.7 billion in 2012, a 2.1 percent increase from 2011 spending of $246.6 billion.

The report has said that the fastest-growing segment within the ITO market is cloud compute services with an estimated growth of 48.7 percent in 2012 to $5.0 billion, up from $3.4 billion in 2011. The cloud compute services are part of the cloud-based infrastructure as a service (IaaS) segment.

"Today, cloud compute services primarily provide automation of basic functions. As next-generation business applications come to market and existing applications are migrated to use automated operations and monitoring, increased value in terms of service consistency, agility and personnel reduction will be delivered", said Gregor Petri, research director at Gartner.

"Continued privacy and compliance concerns may however negatively impact growth in some regions, especially if providers are slow in bringing localized solutions to market," Petri added.

Meanwhile, the growth of Data center outsourcing (DCO), a mature segment of the ITO market that represented 34.5 percent of the market in 2011, will decline 1 percent in 2012.

"The data center outsourcing market is at a major tipping point, where various data center processing systems will gradually be replaced by new delivery models through 2016. These new services enable providers to address new categories of clients, extending DCO from traditional large organizations into small or midsize businesses," said Bryan Britz, research director at Gartner.

The application outsourcing (AO) segment is expected to reach $40.7 billion, a 2 percent increase from 2011 spending of $39.9 billion.

"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)," said Britz.

According to Gartner, although there will be some impact from the current business slowdown due to sovereign-debt issues in Europe and slowing exports in China, the ITO market in the emerging Asia/Pacific region is expected to represent the highest growth of all regions.

Spending on ITO in the Asia/Pacific region will grow 1 percent in U.S. dollars in 2012 and exceed 2.5 percent growth in 2013.