IT outsourcing set for boom, analysts predict

Financial services spend on IT outsourcing is set to grow by 27% in Europe to £7.7bn by 2005, according to analyst Datamonitor. And the UK will contribute £1.9bn of that total, rising from £1.4bn last year, according to the study, IT and Business Process Outsourcing in Financial Services.

The report comes hot on the heels of JP Morgan Chase’s seven-year $5bn deal with IBM, and EDS’ $1.5bn contract with ABN Amro sealed last week.

Infrastructure outsourcing, which includes handing over desktops, network, datacentre or web hosting, represents 56% of the market.

This will continue to be one of the strongest areas as the big financial institutions become more confident in handing over control to suppliers, according to Anders Maehre, financial services technology analyst at Datamonitor.

‘IT outsourcing has reached a level of maturity where the technology is more mature and expertise has been demonstrated. The financial services institutions have greater confidence in vendors,’ he said.

Application outsourcing, which includes off-shore development and use of application service providers will remain a relatively niche area but business process outsourcing (BPO) will grow by £747m, the study said.

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