IT outsourcing firm or cloud provider? The line keeps blurring

IT outsourcing firm or cloud provider? The line keeps blurring

Summary: Cloud is the fastest-growing piece of the IT outsourcing market.

TOPICS: Cloud, Outsourcing

The Gartner Gang reports that cloud computing represents the fastest-growing segment of the IT outsourcing market.  While still a relatively small piece of this market, it points to a blurring between solutions. Are cloud providers -- especially Infrastructure or Platform-as-a-Service vendors -- IT outsourcers? Are IT outsourcers and systems integrators becoming cloud vendors? What's the difference anymore?

Cloud3-photo by Joe McKendrick

Gartner just reported that worldwide spending for IT outsourcing services is on pace to reach $252 billion in 2012, a two-percent increase from 2011 spending of $247 billion. The fastest-growing segment within this market is cloud compute services, part of the cloud-based infrastructure as a service (IaaS) segment.

Cloud compute services are expected to grow 49% in 2012 to $5.0 billion, up from $3.4 billion in 2011, Gartner says.

Underscoring Gartner's projections, ZDNet's Jo Best reports that Infosys has just launched its "Cloud Ecosystem Hub," designed to enable companies to buy, deploy and manage cloud services across multiple environments. The Hub's brokerage service enables users to compare products from over 30 companies, including Amazon, Microsoft, VMWare and Oracle, as well as make recommendations.

While cloud will still remain a smaller portion of the overall IT services market (about 2%), in nonetheless represents an impending shift for IT outsourcing providers. Many IT resources are now available as cloud services, and can be purchased incrementally, online, on an as-needed basis. The outsourcing companies that want to get ahead of this curve may serve as aggregators or brokers of collections of cloud services, such as what Infosys is doing.

On a related note, Phil Fersht, head of HfS Research and author of the Horses for Sources site, is running an advocacy poll as to whether the term "outsourcing" should be done away with. "Sourcing" might definitely say enough. (And applies to cloud situations.)

(Photo by Joe McKendrick.)


Topics: Cloud, Outsourcing

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1 comment
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  • To cloud or to outsource?

    Hello, Joe. This is E.G.Nadhan, Distinguished Technologist, HP Enterprise Services.

    Your article calls out the subtle differences between outsourcing and cloud services. I found the questions you have posed intriguing -- a) Are cloud providers IT Outsourcers? b) Are IT Outsourcers and systems integrators becoming cloud vendors?

    Your questions as well as your assertion that the line is blurring between the two prompted me to identify the key criteria that enterprises can leverage to determine the optimal approach for various scenarios.

    What I find interesting is that the answer really varies by enterprise as well as by the time frame. If outsourcing is the answer for a given scenario today, cloud computing services may be the answer for the same scenario tomorrow.

    Please check out my post at your convenience and let me know what you think.

    Twitter: @NadhanAtHP