1. The presentation discusses key trends in the IT outsourcing market in 2010, including the rise of cloud computing and its impact on service providers and customers. 2. Cloud computing enables new balances of service quality, flexibility and price, while also cannibalizing traditional revenue sources. 3. This is leading providers to protect margins by investing in new offerings and delivery models, and leading customers to manage risk and take advantage of industrialized services.

1. IT Outsourcing Enters a New Decade:
Current and Future Trends
IFCLA 2010 Conference - Helsinki
Claudio to edit
Click Da Rold Master subtitle style
VP, Distinguished Analyst
Notes accompany this presentation. Please select Notes Page view.
These materials can be reproduced only with written approval from Gartner.
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Gartner is a registered trademark of Gartner, Inc. or its affiliates.

2. 2010: Cloud Has Become the Metaphor For the
Industrialization of IT Services
Cloud computing represents a fundamental change
in the relationship between those who use solutions
based on technology and those who provide them.
The result will reshape strategies from "budget" to
"business" for providers and buyers alike.

3. Key Issues
1. What are the key trends affecting the
outsourcing and IT service market in 2010?
2. How market trends affects service providers and
what are the potential outcomes for the outsourcing
and IT service market?

4. What Are CIOs' Priorities for 2010?
Business Growth and Cost Reduction

5. What Are SOURCING Priorities? Traditional
Objectives, Traditional and Alternative Models
Top Sourcing Priorities of 206 European Degree of Interest in
IT Organizations 2009/2010 Alternative Delivery Models
SaaS
Reduce cost, reduce assets or improve IU
cash flow (economic, financial conditions)
Cloud Computing
1
0
2
RIM
Gain access to resources and capabilities
BPU
SaaS
Improve flexibility IU
Cloud Computing
9
0
2
RIM
Improve scalability
BPU
SaaS
Improve agility/reduce processing cycles
IU
(speed)
Cloud Computing
2009
8
0
2
RIM
Reduce business risk 2010
BPU
0 5 10 15 20 25 30 35 40 45 50
0 20 40 60 80 100
Percent
Percentage of Respondents Very High High
Source: Gartner (May 2010) Source: Gartner (May 2010)

6. Potential Impact of the 2009/2010 Recession
and Service Industrialization on Prices
Average
IT Infrastructure Outsourcing Application Services Price or Rate
Outsourcing Services Price Reductions Contract or Area Reductions
Data center services 5% to 15% Offshore rates in India 2% to 6%
Desktop/help desk services 5% to 10% Offshore rates in China 10% to 20%
Network services 10% to 15% U.S. on-site rates 12% to 17%
Application hosting services 10% to 20% Eurozone on-site rates 5% to 15%
•
Typical multinational service providers' net margin is 6%;
Indian providers' is 17.6%, decreased from 19.3% in 2007
•
Providers must increase their flexibility and decrease
their cost:
-
Standardize services, consolidate, partner, aggregate, outsource
-
Restructure workforce, salaries, subcontractors
-
Accelerate toward alternative delivery modes, IT service value chain,
new service/business models, cloud computing (= investments)

7. Key Issues
1. What are the key trends affecting the
outsourcing and IT service market in 2010?
2. How market trends affects service providers and
what are the potential outcomes for the outsourcing
and IT service market?

8. The Services Market Is Changing
(refer “The 2001-2010 Reshaping of the IT Service Market”, 2 April 2001; M-12-7186)
Business Value-Add
Optimization Creation
Custom
Business
BPO~HR~
Strategy Vertical/Proce
Logistics~F
Consulting Custom ss- Cloud-Based
&A
IT Solutions Specific Business Process
Consultin ERP~SCM~ Horizontal
Business Services
CRM Call Business Utility
Process
g
App. CRM~BI
Center Process
Develop. Transaction SaaS
Utility Cloud-Based
&
Enterprise Processing Shared
Application
Integration
One-to- App. Mgmt. One-to-
Services
Delivery
One Remote Many
Data Center Managed
Outsourcing Cloud-Based
Services
Hosting/ Infrastructu Application
Desktop Colocation re Infrastructure
Management Storage Utility Services
Network Services on
Demand Cloud-Based
Help Desk Network System
Value
Outsourcing Utility Infrastructure
Management Access Services
IT Efficiency

9. Role of Recessions in the Industrialization
of the IT Services Market
Business Value-Add
Optimization Creation
Consumerization
Traditional
Service
Models
Global
Process
Delivery
Enterprise Standardiz Alternative Shared
One-to- ation Delivery One-to-
One & Portfolio Many
Models
Rationaliz
ation
2001-2002
Dot-Com Crash 2008-2009
Economic
Management Crisis Access
IT Efficiency

10. Examples of Application Service Providers
in Nearshore Locations
Czech Republic: Romania:
IBA, Infosys, TietoEnator Ness, Wipro
Hungary: Slovakia:
EPAM, HP, Lionbridge,
Neoris, Ness, SIS
SIS, TCS,
Unisys Latvia:
Morocco:
Atos Exigen, TietoEnator
Origin,
Capgemini
, Logica Russia:
Poland:
Capgemini Aplana,
, CGI, DataArt,
HCL, HP, EPAM,
TietoEnato Luxoft,
Spain: Ukraine:
r
Atos Origin, Capgemini, CGI, Reksoft
Aplana,
Softtek DataArt,
Exigen,
South Africa: Belarus:
Luxoft
Fujitsu, Patni, EPAM,
Zensar Exigen, IBA
Group,
TietoEnator

11. Examples of IT Infrastructure Outsourcing
Providers in Nearshore Locations
Poland:
AtosOrigin, Capgemini, TechTeam Ireland:
Fujitsu, HP,
SIS
Czech Republic:
Italy:
CSC, HP, IBM, TietoEnator, T-Systems
EDS
Hungary:
HP, Getronics, T-Systems, Portugal:
Unisys, IBM Fujitsu,
Romania: Logica
Capgemini, TechTeam, Scotlan
SIS d:
Slovakia: Getroni
HP, T-Systems Spain:
cs
Computacenter, HP, T-Systems, BT
Latvia:
CSC, TietoEnator Russia:
Fujitsu
Estonia:
Fujitsu South Africa:
Fujitsu, IBM, T-Systems
Bulgaria:
HP

12. Colocation, Hosting and DCO: Toward
Infrastructure Utility and the Cloud
Outsourcing/
Hosting Infrastructure Utility Cloud Computing
Capgemini (SAP Run), IBM (AoD for SAP), Amazon SimpleDB,
HP USS for SAP T-Systems Dynamic Services for SAP, Google App Engine,
Data Centre Logica SAP ODIS HCL IU4SAP
Outsourcing Cloud Application
Specialized Platforms Infrastructure
(Application Platform
IU4 SAP, Exchange, Dynamics, … as a Service)
AtosOrigin (x86 Utility), CSC Instance2Go, HP AiaaS, Microsoft Azure Service Platform,
IBM FSO, Logica ODIS, FSC IaaS, HCL BRI,
Application Capgemini COD, T-Systems Dynamic Services
salesforce.com Force.com,
Hosting LongJump Application Platform
Terremark (Enterprise Cloud)
Utility Servers,
Storage, … Virtual DC
Layered Tech, Enki, BT
Dedicated Utility Hosting ServePath's GoGrid Amazon EC2, S3, EBS, SQS
Managed Hosting AT&T (Synaptic Hosting),
Cloud System
AT&T, Rackspace, Savvis (Virtual Intelligent Hosting), Infrastructure
Telefonica, Joyent, Linode, Rackspace Cloud Sites/
Savvis, Sungard, DataPipe, Terremark (Infinistructure) Servers, Nirvanix Storage Delivery Network,
AppNexus, VPS Hosting
StrataScale Vaultscape, Joyent Accelerators, Bingodisk
1&1, Yahoo, GoDaddy
Shared Hosting and BlueHost Note: Sample list
Colocation

13. Emerging IU Categories That Lead to
Subcategories and Stand-Alone Offerings
Storage as a Service/Storage Utility
Subcategories Outsourced Hosted Cloud Drive in
Attribute on Premises Remote Storage the Sky
Location Client site Provider site Provider/cloud Provider/cloud
Latency Low Low High High
Price Custom quote $1-$8 Gb/month $.15-$.25 Gb/month Free to $.20
allocated RAID 5 + transport fee Gb/month
raw space
Examples CSC, EDS Rackspace, Amazon AWS, Yahoo, Google
Savvis, outsourcers Nirvanix
Virtual Servers/Utility Hosting
Subcategories Shared Hosting Dedicated/Managed Utility Cloud Hosting
Virtual Private Server /Flexible Provision Hosting/VDC
Attribute
Server Access Control panel, limited shell Hosting to full admin. Full admin. Programmatic
Virtualization Partition/hypervisor None Hypervisor Unknown
Price (month) ($5-$200) - $70-$300 $700-1,000 or more $300 or more $0.10 CPU/hr.
Examples 1&1, Yahoo, Verio, Savvis,Rackspace, Terremark, AT&T, BT, Amazon, Rackspace,
Lunarpages Outsourcers Savvis, GoGrid, Joyent

14. Emerging Model: Infrastructure Utility for
SAP
IU for SAP: Industrialized managed service that supports and delivers
SAP production, tests and develops environments (based on clients' licenses
and their customized implementations).
1-5 Direct Standar Service
Support: Help Language Account d Portal
Desk s Manager Reportin
SAP: All Standard ECC 6.0 R/3 g
Modules
Database: MS SQL Oracle MaxDB
Virtualization: VMware LPar VPar Integrity Solaris
Containers
VM
Infrastructure: AIX HP-UX Solaris Linux Win
2003
Connectivity: Internet + MPLS Dedicated Frame Relay
VPN
•
Virtualization used in every solution; automation still a work in progress.
•
Clients get some choice of platforms but not all are available. Standard SLAs and T&Cs
•
Geographic availability is expanding (Germany, Europe, US, APAC)
•
Transition — Two weeks to six months. Most providers indicate four to eight weeks.
•
Entry level price moved from 15€ PUPM (2008) to 10€ PUPM (2009)
•
More than 450 clients and 500.000 named users by 5 providers – more providers are coming
•
Revenue growth of 45-100%+ and IU/OS revenue at 40%+ for key players

15. Cloud Computing is Driving Net New
Business Opportunities (2010-2012)
Business Value-Add
Optimization Creation Adv 26 B$ nnb
Business Custom
BPO~HR~ Vertical/Process
Strategy Vertical/Proce
Consulting Logistics~F ss-
BPU 17 B$ nnb
Cloud-Based
Custom
ITS/cloud 4 B$ nnb
IT
&A
Solutions Specific
Horizontal
Business Process
Services
Consultin ERP~SCM~
CRM Call Business Enterprise BPU 11 B$ nnb
App. Business Utility
Process
g CRM~BI
Center
Develop. Process
Transaction SaaS Cloud-Based
Enterprise
& Cloud Utility Shared
Processing SaaS 5 B$ nnb Application
One-to-
IntegrationApp. Mgmt.
Aggregation Services One-to-
One Delivery Many
Remote
Data Center Managed Cloud-Based
Outsourcing Services
Hosting/ Infrastructu Application
Desktop Colocation IUS re B$ nnb
10 Infrastructure
Management Storage Utility Services
Network Services on
Demand Cloud-Based
Help Desk Network System
Value
Outsourcing Utility Infrastructure
Management Access Services
IT Efficiency

16. Main Implications
1. Cloud computing and alternative delivery models enable a
new balance of service quality, flexibility and price for
outsourcing and IT services.
2. The market is changing, with traditional and new offerings
co-existing, and new offerings cannibalizing revenue.
3. This is leading providers to focus on protecting their
margins and investing in new offerings and delivery
models to maintain and gain market share.
4. It's leading customers to focus on managing risk, integrate
multi-sourcing initiatives and take advantage of
industrialized services.

17. IT Outsourcing Enters a New Decade:
Current and Future Trends
IFCLA 2010 Conference - Helsinki
Claudio to edit
Click Da Rold Master subtitle style
VP, Distinguished Analyst
Notes accompany this presentation. Please select Notes Page view.
These materials can be reproduced only with written approval from Gartner.
Such approvals must be requested via e-mail: vendor.relations@gartner.com.
Gartner is a registered trademark of Gartner, Inc. or its affiliates.