Is Cloud Accelerating The Outsourcing Market?

Companies are turning increasingly to IT outsourcing as a means of supplementing and, in some cases, replacing internal hires. That’s especially true of application hosting. About 35% of companies say they’ll outsource more in this area during the next year to 18 months, according to a new report from global consulting firm Bluewolf. Cloud computing is partially driving this growth, as more companies use applications from the likes of Salesforce, Google and Workday.

Companies spend nearly half of their outsourcing budgets on application services including development, hosting and maintenance. Bluewolf predicts that as more companies rely on cloud providers, the outsourcing of applications will grow, whether it’s to providers who offer niche services or larger companies like Google or Microsoft.

The growth of cloud computing within the outsourcing market was also detailed in a Gartner report, released August 7. While it still represents just a fraction of the global IT outsourcing market, of around $251.7 billion in 2012, cloud computing services are the fastest growing segment of IT outsourcing worldwide, and are expected to grow 48.7% in 2012 to $5 billion, up from $3.4 billion in 2011, according to Gartner.

Source: WSJ