Executive Briefings

Pricing of IT Outsourcing Buffeted in the Downturn

There has been much discussion about the global economic recession's impact on the price of IT outsourcing services. The consensus has been that buyers keen to cut costs coupled with decreasing demand for IT services would drive prices down across the outsourcing market.
Indeed, according to a report from outsourcing consultancy EquaTerra, 76 percent of outsourcing service providers said that pricing pressure had increased during the first quarter--a jump of more than 30 percent from the previous quarter and last year. And while customer pricing pressure does not necessarily equal provider price slashing, Gartner had predicted that IT services would decline in price anywhere from five to 20 percent, depending on the type of work, over the next year.
Gartner vice president and research director William Maurer notes that while 2009 pricing analysis is just beginning, those predicted percentages are on target thus far.
But outsourcing experts say the price decreases aren't necessarily a direct result of the recession, nor are they happening industry-wide. In some cases, prices aren't falling at all; customers are just paying for fewer or lower quality services.
Source: CIO

There has been much discussion about the global economic recession's impact on the price of IT outsourcing services. The consensus has been that buyers keen to cut costs coupled with decreasing demand for IT services would drive prices down across the outsourcing market.
Indeed, according to a report from outsourcing consultancy EquaTerra, 76 percent of outsourcing service providers said that pricing pressure had increased during the first quarter--a jump of more than 30 percent from the previous quarter and last year. And while customer pricing pressure does not necessarily equal provider price slashing, Gartner had predicted that IT services would decline in price anywhere from five to 20 percent, depending on the type of work, over the next year.
Gartner vice president and research director William Maurer notes that while 2009 pricing analysis is just beginning, those predicted percentages are on target thus far.
But outsourcing experts say the price decreases aren't necessarily a direct result of the recession, nor are they happening industry-wide. In some cases, prices aren't falling at all; customers are just paying for fewer or lower quality services.
Source: CIO