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IT directors embrace outsourcing during financial crisis

The financial crisis has failed to dent confidence in outsourcing, with 80% of IT directors confident that their outsourcing investment continues to deliver value, according to research from Patni Computer Systems, released today.

The survey found that 40% of IT directors plan to increase their use of IT outsourced services in the next 18 months, with only 22% saying they plan to cut back. The research points to the UK IT skills gap – particularly where IT is not core to the business – as the source of such strong IT director confidence in outsourcing during uncertain times.

The financial services industry was the vertical sector that most embraced IT outsourcing, with 48% planning to increase spend; while manufacturing was least confident, with 40% saying they plan to reduce investment.

Commenting on the findings, Brian Stones, Executive Vice President EMEA, Patni, says: “The financial crisis is impacting businesses across all vertical sectors, with cost cutting and efficiencies coming to the fore. It’s not surprising to see that financial services companies in particular are embracing outsourcing which, along with other vertical sectors, ensure the ability to maintain service delivery and plug the skills gap during these uncertain times.”

The “Patni Pulse” is the first wave of planned regular research which seeks to take the pulse of the IT industry’s confidence in outsourcing. When asked whether confidence in IT outsourcing had changed over the past year, 27% said it had increased and 24% said it had decreased.

Almost two thirds (63%) of IT directors said confidence in outsourcing had increased because, “the range of skills we need would be difficult to create ‘in-house’”, while 59% said that “the level of service received from outsourcing providers has increased”. 44% said that “in the current climate it makes financial sense to reduce headcount and outsource”.

Of those with decreasing confidence in IT outsourcing, 67% believed that “the cost of IT outsourcing has increased”, while half of respondents said that “the level of service received from outsourcing providers has decreased” (both of these reasons increased to 75% within manufacturing). The effect of the troubles associated with the Satyam scandal was negligible, however, with only 8% citing “high profile cases of fraud associated with outsourcing” as a reason for their lower confidence.

The Patni Pulse was carried out for Patni Computer Systems by Vanson Bourne in February 2009.