Outsourcing on the increase: META Group

Eighty percent of organisations will outsource at least one function by 2005, according to one industry analyst.

Industry analyst META Group believes that outsourcing will continue to grow, for "organisations seeking to remain competitive during the next decade".

However, of the 70 percent of that group which would renew outsourcing contracts, many would reduce the scope and duration of the original agreement.

Dane Anderson, senior research analyst at META Group, said the growing popularity of asset leasing arrangements, and the increased focus on business and IT alignment, were playing an important role in this.

"Vendor performance may factor into the decision to cut back on existing outsourcing arrangements, yet the trend is really driven by the need for organisations to regain control of their IT strategy and architecture," Anderson said.

META Group argues that organisations won't get a significant return on investment with outsourcing unless they assess expectations, objectives, vendor selection, service level agreements, and management.

"Although outsourcing is clearly a strategic decision, the tactical and operational implementation of an outsourcing agreement often neglects many of the fundamental elements required for success," according to Anderson.