Reduction in outsourcing prices anticipated

The report blamed the uncertain economic climate and increasing competition in the market between traditional and new providers – with more providers competing aggressively to keep revenue growth on target, while trying to ensure margins. Gartner anticipated that cost focused buying behaviour will be a key factor behind the reductions for IT infrastructure outsourcing services from 2009 to 2010, with a great variability based on each single deal. Gartner's vice president, Claudio Da Rold, said: "Regardless of the relative strength of outsourcing during a recession, many clients are reporting intense discussion with their vendors and renegotiation of contracts for terms and conditions, service level agreements, fees, volumes and low cost offshore delivery locations. These items are under scrutiny to identify satisfactory concessions to further reduce the cost of services on a case by case basis." Da Rold advised clients and providers not to push for extremely low prices as these will not make providers safer, deliver good services or promote a positive relationship.