Information technology outsourcing, or ITO, is the use of service providers for delivering IT-reliant business processes, application services, and infrastructure solutions. Outsourcing in more general terms means the contracting of portions of work to outside suppliers, usually in an effort to reduce costs. Services such as cloud computing and its sub-segments, such as Software as a Service (SaaS), are adjacent services but are considered to be part of the core service of IT outsourcing.
Figures for the market size of IT outsourcing vary depending on how the source defines “outsourcing” and what kind of industries, services, and segments are included. According to the Information Services Group, when focusing on contracts with a total value of more than 25 million U.S. dollars, the annual global revenue from information technology outsourcing is estimated to amount to between 60 and 70 billion U.S. dollars. Gartner meanwhile valued the global market for IT outsourcing services at more than 280 billion U.S. dollars per year in 2013, although their definition of ITO includes cloud-enabled outsourcing and Software as a Service. An estimate by Forrester Research sees global business and government spending for IT outsourcing and hardware maintenance at more than 440 billion U.S. dollars in 2016. This estimate includes spending on networks, application outsourcing, infrastructure outsourcing, hosting, computer hardware support services, application management, and infrastructure cloud services.
Overall, the market size for IT outsourcing is expected to shrink over the next few years as cost-savings are achieved by enterprises moving to less expensive cloud environments. However, individual segments and markets, such as cloud computing or IT healthcare outsourcing, are projected to grow. IT healthcare outsourcing, for example, is expected to increase from around 35 billion U.S. dollars in 2013 to around 50 billion U.S. dollars by 2018, at a CAGR of 7.6 percent.
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