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Tech & Sourcing @ Morgan Lewis


A recently released study assessing current trends in the use of IT outsourcing found that spending on IT outsourcing is rising at a rate in step with IT operational budgets as a whole, led by large organizations (those with IT operating budgets of $20 million or greater) that spend 7.8% of their IT budgets on outsourcing at the median. The study’s findings also highlight a number of trends within organizations’ IT outsourcing priorities:

  • Shifting Trends in Some IT Outsourcing Functions. The study found that the outsourcing of some IT functions is growing, while outsourcing of other functions is shrinking. For example, more organizations are outsourcing IT security, e-commerce systems, and application hosting, while fewer organizations are outsourcing help desk, desktop support, and application maintenance functions.
  • Continued Growth of Software as a Service. Application hosting was the most frequently outsourced IT function identified in the study. It found that 65% of organizations that currently outsource application hosting intend to increase the amount of work outsourced for that function.
  • Outsourcing Versus In-House. Among organizations that outsource IT functions, the study showed help desk and web/e-commerce operations were the IT functions with the largest percentage of work moved to outside service providers. Application hosting and IT security were the IT functions for which organizations tend to perform the most work in-house.
  • Potential for Cost Savings and Value. Among the functions examined by the study, outsourcing of disaster recovery and desktop support were found to have the greatest potential for reducing costs. The outsourcing of web/e-commerce, desktop support, disaster recovery, and IT security were found to deliver the best overall value for organizations by saving money and improving service levels.