Phil Hassey, IDC's senior analyst, Asia Pacific outsourcing, points out that the largest corporate IT consumers in Australia are either firmly entrenched in IT contracts, or have decided to keep their IT requirements in-house.
-This presents a huge challenge for service providers like IBM GSA, CSC and EDS, as they will be forced to move into the mid-tier in order to grow," Hassey said.
Hassey described the shift as a huge challenge to the major players. -Many of the service providers have scaled their offering to suit the different needs and cost structures of mid-tier businesses and government departments, they are well aware that the market is changing."
Mid-tier outsourcers such as Getronics have also noticed the market shift, and believe they are well placed to benefit from the growth.
Peter King, national marketing manager for managed services at Getronics, said the shift will lead to growth in the sector, especially for those companies that are prepared to work closely with their customers and offer service level guarantees.
-Managed service providers and outsourcers need to understand why their customers are outsourcing in the first place," King said. -It will be harder for the big players to move down into this sector because they are used to service provision on a different scale."
Describing the mid-tier market highly price sensitive, King believes outsourcers already focussed on this sector will have an upper hand when it comes to creating appropriate value propositions.
-The traditional issues are still there, mid-tier companies need someone who will enable them to focus on core competencies and provide return on investment," King said. -However, they are also aware of the strategic importance of outsourcing and are looking for partners with whom they can work closely."
Hassey believes the mid-tier market will be particularly challenging as such organisations turn to outsourcing in order to compete with larger industry players and achieve overall cost savings.
-They have completely different needs and cost structures," Hassey said. -It will be as much a challenge to the larger players interested in moving into this sector as it will for mid-tier outsourcers facing increasing competition from the big end of town."
