Application Maintenance Outsourcing Is On The Rise

February 27, 2012 Dan Burger

Like a horror movie sequel, the outsourcing of application maintenance work has brushed off the dirt of its would-be grave and is on the prowl again, thirsty for the blood of programmers here in the USA. Outsourcing never really died. It just fell off the pace that was being set prior to 2009, when the trend stumbled rather badly thanks to the Great Recession.

According to a recently released study by Computer Economics, the number of organizations that are outsourcing application maintenance work has risen during the past two years to near pre-recession levels.

After a peek at this report, titled Application Maintenance Outsourcing Trends and Customer Experience, I can toss out a few chilling statistics. To begin with, 37 percent of organizations surveyed outsourced some application maintenance work in 2011. That’s 10 percent higher than 2009, and just slightly below the 40 percent that outsourced application maintenance in 2007.

CE noted that 2009 took its toll on application development in general, which led companies to assign programmers to maintenance work and partially wiped out the need to outsource maintenance.

Although IT capital spending on an upward swing, it still lags behind the spending of just a few years ago. As spending increases, the demand to upgrade applications is expected to once again lead to more outsourcing of maintenance.

Hiring of IT staff has been stifled because of the two-year steady increase in application maintenance outsourcing. CE doesn’t anticipate much increase in hiring until the economic recovery shows more signs of strength.

Application maintenance is one of the most popular IT functions to turn over to outside service providers, according to the survey results CE has turned into a report. In addition to examining application maintenance outsourcing trends–the frequency of application maintenance and the average amount of work outsourced–this report includes the level of satisfaction and dissatisfaction that companies have experienced. To this point, the report examines costs compared to level of service. The entire report (19 pages and 14 figures) is available from Computer Economics for $195. It can be ordered on the company website.