Outsourcing Consulting Segment Surges; Big Opportunities In Middle Market

EDP Weekly's IT Monitor, Sept 14, 1998

The outsourcing consulting business is experiencing a boon, as strong interest continues in outsourcing as a viable option for cost-cutting, operational efficiency, and for addressing the IT skills shortage. According to a new study by International Data Corp.'s Consulting research program, a robust compound annual growth rate of outsourcing consulting will almost be 40 percent between 1997 and 2002 in the United States.

Most firms that enter into outsourcing contracts today enlist the services of external consultants and/or legal firms to provide advisory services on issues such as: what to outsource; who to chose as a vendor; how to price the contract; how to manage the relationship; and when to renegotiate.

According to the IDC report, an overwhelming majority of outsourcing contracts deemed to be "successful" involved the assistance of a third-party consultant; by contrast, the "unsuccessful" engagements had for the most part not obtained outside consulting assistance.

"The robust growth ofoutsourcing consulting will increasingly become fueled by a growing use of outsourcing by medium-sized companies with annual sales between $200 million and $1 billion," says IDC. "Although large companies will represent the largest portion of outsourcing spending, the market in the US is nearing saturation. The middle market, on the other hand, is an untapped market segment, representing tremendous outsourcing opportunities." The new report, The Increasing Use and Importance of Consultants in Outsourcing (IDC #16887), is available for purchase by contacting Cheryl Toffel at 508-935-4389, e-mail: ctoffel@idc.com.