According to the recent survey by IT research site computereconomics.com, companies are deciding to keep more of their IT functions in-house as the economies recover.
The study found that the IT outsourcing budgets have been decreasing since 2012. The total IT spending in 2012 was 11.9%. There was a significant drop to 10.6% in 2013 and a slight decrease to 10.2% this year.
Outsourcing of IT services such as desktop support, help desk and application maintenance has declined while application development, data center, network operations, database administration and disaster recovery outsourcing are in a steady phase.
Vice president of research for Computer Economics John Longwell stated, “From a broad perspective, the most likely explanation for the downward tilt in outsourcing as a percentage of the total IT spending is the ongoing economic recovery.” There is an increase in IT budget but companies are allotting the budget heavily for investing in internal operations and not much in outsourcing to IT service providers.
The study pointed that in the early stages of the recovery, firms outsourced their IT functions because they were concerned to hire full-time employees. As the economies stabilize, firms focus on system improvements and allocating manpower to progress.
The study also found that application hosting is the fastest growing type of outsourcing and the most frequently outsourced function. However, disaster recovery, web and e-commerce, network operations and data center operations are the most valuable IT services.