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  • Gartner Predicts Strong Outsourcing, Weakening Business Intelligence Markets

    January 21, 2008 Timothy Prickett Morgan

    I don’t know what is more disconcerting: the large number of predictions and prognostications that we usually see being publicly made about the forthcoming IT spending year as one year ends and a new one begins, or the lack of such auguries–at least publicly–from the usual suspects in the IT consulting racket. But at least some of the analysts at Gartner have the itch to predict, and they made some calls recently about the outsourcing and the business intelligence software markets.

    The amount of money that companies worldwide spend on outsourcing is just staggering. In 2007, the global outsourcing market accounted to $408 billion in sales, according to Gartner, and will grow another 8.1 percent in 2008 to reach $441 billion. Interestingly, the number of big bang outsourcing deals done by large public companies with a single outsourcing provider are down, according to Gartner, falling by 50 percent in 2007. Some of the decline is also due to the fact that outsourcing is common place, and deals are not reported as if they were novel–any more than companies talk about switching from one server platform or ERP system to another. But you can bet that the outsourcing giants based in India will continue to try to make some noise, as their businesses are growing at an approximate 40 percent rate in the United States and 60 percent rate in Europe; spending on offshore outsourcing services is still three times higher in North American than in Europe, however.

    More details about the outsourcing market are available in a new report, entitled Gartner on Outsourcing, 2007-2008, which you can get here. Gartner is also hosting the Outsourcing Summit in Washington, D.C., from May 19 through 21 to dice and slice the complex outsourcing market for its customers.

    “Other countries will continue to emerge as challenges to India for a number of reasons,” explained Ian Marriott, a research vice president at Gartner and one of the authors of the report. “Strong demand is putting a strain on the available Indian labor force, while staff attrition and cost increases remain high. Global companies continue to accelerate their demands for a presence in countries other than India, and providers are seeking to expand their geographic footprint of delivery centers accordingly. More-sophisticated buyers are seeking a multicountry strategy to minimize risk and align nearshore and offshore delivery centers with their primary time zones. Although India’s offshore revenue will continue to grow, the country’s share of total offshore spending will decline slightly in 2008.”

    In the business intelligence area, Gartner is projecting that growth will slow in the wake of vendor consolidation, price competition, and mature products and customer bases. With Oracle acquiring Hyperion, SAP buying BusinessObjects, and IBM buying Cognos, you might think that aggressive pricing might settle down now that some competition has been eliminated and something akin to an OPEC cartel for BI software would evolve. First of all, that would be illegal, and second, Oracle, SAP, and IBM did those BI acquisitions to be competitive and to sell more products and services to outside of the BI realm. Giving a sneak peak into the future of BI software and services sales, Gartner’s analysts say that the market will grow more slowly at 12.5 percent in 2007 than the rate set in 2006, and that by 2011, when the market will crest above $7 billion globally, growth rates will be in the single digits. Gartner calculates the compound annual growth rate from 2007 through 2011 (inclusive) to be 8.6 percent, in fact.

    Basically, the remaining BI software vendors are going to try to make it up in volume. With North America, Western Europe, and Japan already accounting for five-sixths of BI sales worldwide, you can bet that the remaining players will be chasing opportunities in fast-growing and green-field markets, such as Brazil, Russia, India, China, Singapore, Malaysia, and such. The mid-tier players, such as SAS, Microstrategy, and Information Builders are going to be fighting hard to compete, and smaller players such as Arcplan, Panorama, and Qliktech are going to have to ramp up their sales and marketing efforts, too. Luckily, the SMB space is large and underserved in so many markets, including BI software. For most SMB customers, business intelligence is synonymous with “Microsoft Excel.”



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    Tags: Tags: mtfh_rc, Volume 17, Number 3 -- January 21, 2008

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    Admin Alert: Before You Buy That New System i, Part 1 AURA Equipments Beats IBM to the Punch with DB2/400 Engine for MySQL

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TFH Volume: 17 Issue: 3

This Issue Sponsored By

    Table of Contents

    • Weak Dollar, Services, and Power6 Give IBM a Solid Fourth Quarter
    • IBM Aims for Server Expansion in 2008, Including System i Reincarnation
    • Readers Riff on the 2008 System i Wish List
    • Sun Casts a $1 Billion Net to Catch MySQL
    • The Rumor Mill on IBM’s Impending Platform Announcements
    • Some Info on i5/OS V6R1 and V6R2 Support
    • A Little More Color on IBM’s Q4 2007 Server Sales
    • Microsoft Rises to Sixth on Patent List for 2007
    • BEA Systems Finally Says Yes to an Oracle Buy
    • Gartner Predicts Strong Outsourcing, Weakening Business Intelligence Markets

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