Outsourcing 2003-style - 'nearshoring' and 'megadeals'

Outsourcing will continue to be a key strategy for IT departments this year, though there will be a key divide in the type of contracts signed, according to the latest research.

Offshore application management - conjuring images of highly-skilled programmers in India or Eastern European countries - was ranked by 36 outsourcing vendors in a November poll by Gartner's Dataquest unit as their highest growth service opportunity for 2003.

This category is followed by what is now called 'nearshore application management', for example US companies using the services of experts in Canada, or European companies looking at countries nearby.

However, IT infrastructure outsourcing stills grabs the headlines, with Dataquest considering it "hot on a grand scale around the world". For example, 2002 saw at least 14 'megadeals' - outsourcing contracts valued at over $1bn - worth a total of $28.4bn, up on the nine deals worth a combined $15.1bn in the previous year.

IBM led the way in 2002. It won seven of 14 megadeals last year. EDS claimed two and CSC one, though both are known to be in discussions for several more. HP and Fujitsu both landed their first contracts of this scale.

Over the past 12 years, EDS and CSC were the early leaders but now IBM's tally - 32 versus 21 and 15 respectively - is out front.

Nowadays, Dataquest has found, 10-year deals are no longer the standard, and consortia of vendors vying for business are increasingly common.