Gartner Says IT Services Vendors Must Meet Three Criteria to Cope With the Offshore Services Revolution.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--Sept. 18, 2003

As more IT projects are outsourced offshore, North American and Western European IT services vendors, to compete, must shift their domestic resource mix to meet 3 criteria: interact face to face more often, allow for competition based on business value instead of price, and establish requirements for innovation and quality, according to Gartner Inc. (NYSE: IT and ITB).

"Offerings that meet the criteria exploit the inherent problems with offshore services -- namely communication within a global delivery model, and the vertical and business process expertise necessary to demonstrate business value," said Alex Soejarto, principal analyst for Gartner. "In order to compete effectively with offshore vendors, North American services companies need to re-evaluate their delivery methodologies to include larger components of a project that can be delivered off-site."

The increasing use of offshore resources in IT is part of a larger, historic economic trend of moving work from countries with high labor rates to regions with lower labor rates. What is different about the adoption of offshore services, compared with prior economic trends, is the lightning speed at which offshore services have become a mainstream reality that will not disappear once the Western economies recover.

Therefore, Gartner analysts said it's crucial that IT services vendors have some sort of involvement with other offshore service vendors.

"The increasing adoption of offshore services creates both opportunities and challenges for IT services vendors," said Michele Cantara, principal analyst for Gartner. "If they haven't already, North American and Western European IT services vendors that are involved in large engagements of more than $1 million must establish an offshore partnering or acquisition strategy to compete more cost-effectively with offshore service vendors."

Additional information is available in the report "IT Services Vendors Cope With Offshore Services Revolution." This report examines how the market for IT professional services is being reshaped by the presence of offshore services vendors in the IT services value chain. This research can be purchased on Gartner's Web site at www.gartner.com/DisplayDocument?id=407048&ref=g_search. Detailed survey results on user wants and needs relating to consulting and SI services are available in the report "Survey Reveals Users' Systems Integration Services Preferences." This report can be purchased on Gartner's Web site at www.gartner.com/DisplayDocument?id=408278&ref=g_search.

Gartner analysts will provide additional analysis on outsourcing at Gartner Symposium/ITxpo 2003, to be held October 19-24 in Orlando, Florida. Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. For more details or to register for Gartner Symposium/ITxpo 2003, visit www.gartner.com/us/symposium/us or call 1-800-778-1997. Members of the media can register for the event by contacting Maria DiMasi at 212-699-2734 or e-mailing [e-mail].

To keep up to date on the latest outsourcing issues, please visit Gartner's Outsourcing Web site at www.gartner.com/outsourcing. This Web site offers content, tools, products and services that are needed to make effective, strategic decisions about outsourcing. When browsing the site, users receive a breakdown of key outsourcing issues, industry trends, and best practices for making smarter business decisions. This area also includes relevant research and links to Consulting and Measurement services. Custom Alerts are also available, enabling users to stay current on new research focused on their outsourcing agendas. Free copies of the Gartner outsourcing handbook, Outsourcing: The Real Deal, can also be ordered on the Outsourcing Web site.

About Gartner

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients leverage technology to achieve business success. Gartner's businesses are Research, Consulting, Measurement, Events and Executive Programs. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has more than 3,800 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. Revenue for calendar year 2002 totaled $888 million. For more information, visit www.gartner.com.