An IDC study has revealed shifts in the outsourcing market in Australia. Companies are contracting with re-negotiation in mind, by creating leverage through strategies such as "price benchmarking," "claw-back" and "blue-sky" clauses. These strategies may backfire in the long run, according to the analysts.

This trend is primarily driven by the need for flexibility to redefine the contract and minimise the risk. However, IDC advises customers to bear in mind that short term selective outsourcing contracts with blue-sky clauses may provide flexibility within the scope of services, but will not be very price competitive when compared to traditional outsourcing contracts.

"Despite the prevalence of this multi-sourcing trend, the traditional outsourcing suppliers like IBM, EDS ,CSC ended up signing longer term highly bundled multi-tower contracts in 2007. The increasing trend towards Remote Infrastructure Management Outsourcing (RIMO) was evident in its convergence with traditional infrastructure outsourcing, with majority of the contracts involving some elements of the mix delivered from offshore locations, primarily India," said Aprajita Sharma, research manager, Outsourcing and BPO, IDC Australia.

More highlights of the research findings in the report include:

• Security issues with revealing internal processes have become bigger issues with organisations in 2007 compared to the previous year
• Respondents have placed "solid communication" as the highest importance within an outsourcing relationship
• Overall, the results indicate a high level of activity within the applications maintenance/management and development space in large organisations.

“IBM managed a sweeping victory over its competitors when it came to ranking customer perception of being a leading outsourcing player. IBM has reinforced this with some high profile strategic deals signed with National Australia Bank, Commonwealth Bank and others within the Government segment," Sharma added.

About this study

The IDC report, "In The Mind Of The Outsourcing Customer: IDC's Annual Outsourcing Survey, 2007" researches the user preferences and needs for IT outsourcing services and the expectations of organisations looking at procuring these services in the near future. The report also highlights trends across various verticals which are proving to be a catalyst in boosting the outsourcing spend in the near future.

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