Culture Is Now More Important Than Competence In IT Outsourcing, Says META Group

Consultants META Group reckon IT outsourcing provision in North America is now mature enough for buyers to focus on the human rather than the technology or business side of the contracts. Or so suggests its latest analysis of IT outsourcing

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Consultants META Group reckon IT outsourcing provision in North America is now mature enough for buyers to focus on the human rather than the technology or business side of the contracts. Or so suggests its latest analysis of IT outsourcing vendors. “IT organizations can successfully engage in service agreements with any vendor in this evaluation. Each is technically competent,” says Dean Davison, vice president with META Group’s Technology Research Services and lead author of the report. “More important will be vertical skills, cultural alignment, business objectives, and other less tangible characteristics.”

The latest META Group report on the leading outsourcing vendors in North America covers vendors providing a range of commodity infrastructure services: application configuration, development, and maintenance; integration with business services; and management consulting to pull together disparate technology and business services.

META says outsourcing solutions are evolving toward integrated business and technology solutions, and that competitive differentiation now centres on vertical expertise and cultural alignment as well as the ability to be competitive across the complete spectrum of technology solutions and integrate management consulting and business expertise.

“Purchasers of outsourcing will increasingly become combined task forces of business and technology personnel. Vendors must streamline technology offerings and shift sales organizations to sell and maintain credibility with both business and technology professionals,” says Davison. “Because technology is both an enabler and a cost against business operations, optimal use of IT will increasingly impact business results. Failure to leverage technology will become a competitive disadvantage.”

The Top IT Outsourcing Vendors: North America report evaluates 15 vendors in this market. The analysis found that brand value and market reputation are greater contributors to success than solution delivery:

– Leaders possess a full range of technical capabilities and business/vertical market expertise. Brand name is extremely important and leading vendors are investing in customer service.

– Challengers generally work in technology. Some focus on specific niches such as offshore, while others primarily deliver applications or use an integrator model.

– Followers are made up hundreds of niche providers. Although some vendors target specific vertical markets or geographical locations, others service only small/medium enterprises. A follower can be technically competent without widespread brand-name recognition or global delivery.

– Through 2007/08, each vendor will have to develop the following: 1) price-competitive infrastructure solutions, 2) global resource delivery, 3) vertical market depth and specialization, 4) integrated solutions, 5) ability to be an integrator of services, 6) selling models that reach small and medium enterprises in a cost-effective manner.

Providing comprehensive, side-by-side vendor comparisons and research, META Group’s Top IT Outsourcing Vendors: North America METAspectrumSM In Depth report aims to help users evaluate the overall performance of IT vendors and their competitive market position, as well as compare and contrast the strengths and limitations of each vendor’s solution offerings.

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