Executive Summary

The Application Development and Maintenance (ADM) and Infrastructure Outsourcing (IO) segments of the IT Outsourcing (ITO) market vary greatly in terms of growth dynamics and market trends.

Traditional IO suppliers are disproportionably focused on large buyers. The RIMO model, too, is evolving rapidly and is showing signs of convergence with traditional IO, as is evident from changes in pricing and buyer adoption.

ADM outsourcing is entering a phase of relative maturity, which is apparent in the diverse buyer industries served and the focus on large buyers. However, while the ADM activity of offshore suppliers is centered chiefly on labor arbitrage, traditional suppliers are becoming more creative around delivery and pricing. Offshore suppliers also have significantly smaller deals with large buyers, suggesting that they are still operating in a ‘penetrate and radiate’ mode.

ADM suppliers across categories are leveraging multiple offshore geographies for service delivery, reflecting the maturity of the global delivery model and suppliers’ ability to handle the associated additional complexity.

Bundling of BPO and ITO deals is an infrequent occurrence and usually results in smaller contract values across suppliers. Both offshore and traditional suppliers derive the largest share of their signings from contracts that are a bundle of IO and ADM. This paper discusses:

• Key messages from the latest Everest Outsourcing RFI 2007
• Data-driven conclusions on the market trends in ITO in general and the key market segments (i.e., ADM and IO)