Earlier this year, Everest Group conducted its annual study of high-value Application Outsourcing (AO) deals to gain insight into how a range of parameters correlate with deal activity in the AO market. The study, which is part of our Application Outsourcing Market Update 2012 report, analyzed 320 AO deals across a combination of 17 multinational corporations (MNCs), Tier-1 offshore and Tier-2 offshore providers.
Application outsourcing 2012: key findings
- Buyers: Buyers across geographies appeared to be expanding their AO portfolios. Smaller buyers signed a larger number of new deals, and larger buyers leveraged their maturity of engagement with AO service providers to sign a greater number of renewals. While North America continued to hold sway in AO adoption with the largest number of deals, Europe appeared to be a strong engine of growth for service providers, on a year-to-year basis
- Service providers: As the AO market grows in size, there appears to be growing similarity between the sales strategies of MNCs and offshore providers. The offshore providers, over the years, have gained strong traction in AO. MNCs appeared to be tweaking their strategies to expand in this market, which has been the mainstay for offshore providers
- Cloud computing: Cloud computing continues to be increasingly adopted in AO deals. The major components of the cloud service engagements we analyzed were transformation and implementation of business application portfolios
The new drivers of AO
Overall, the AO market appears to grow from strength to strength. When analyzed on key parameters such as geography, type of buyers, and deal type, the study results deliver interesting insights. From adoption of next generation concepts of outsourcing like cloud computing to the increased flexibility that service providers are showing in designing deals, a number of new AO trends are clearly emerging.
To find out more about these trends and other details on the AO market, please read the Application Outsourcing Market Update 2012 report.