Trends in Global IT Delivery and Management
Sandra M. Notardonato
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
© 2010 Gartner, Inc. and/or its affiliates. All rights reserved.

• Market Drivers
• Competitive Landscape
• Success in Global Sourcing
• Future of IT Services
1

$946.6 B
Worldwide
IT Services
Market
$776.5 B
Globally Delivered
Services are estimated to be 9% of total IT services market today
~$70bn
~$120bn-
$150bn
Globally Delivered
Services*
2009 2013
*Gartner estimate — not a Gartner forecast
By 2013, Globally
Delivered Services will represent an estimated
13.0% to 16.5% of the total IT services market

Economic
Factors
• CFOs driving IT cost controls
• Cost-focused IT decision-making
Accelerates offshore services use
Geopolitical
Shifts
• Globalization, emerging economies
• War, terrorist threats, currency flux
Geopolitical risks must be considered
Government
Intervention
• Protectionism vs. globalization
• Pending industry legislation
Monitor changes and legislation
Provider
Viability
• Provider focus on global delivery
• Consolidation, hypercompetition
Buyer choices, but increased scrutiny

Ensure IT Availability/Uptime
('Keep the Lights on')
Reduce the Operating
Costs of IT
Enhance IT to Support
Business Operations
Enable Business Strategy
Change or Transformation
16%
16%
28%
0 5 10 15 20 25
Percentage of Respondents
= US Buyer
Top Driver
Top Driver Second Driver Third Driver
N = 1073
Note: Respondents rank ordering of top three drivers
Survey: Q4 2009, Economic Impact on IT Services Buying
30 35
39%

What Changed in the Past Year? Offshore Use
Occurs More Often in 47% of US Organizations
Renegotiation Of Contracts With ESPs
Influence of CFO on IT Services Spending
Influence of Procurement Department on IT
Services Spending
Use of Offshore Services Delivery 47%
Use of Technology as a Service Offerings
Investment in IT Innovation
Development of Captive Centers
IT Spending Without Approval or Oversight of CIO or IT Department
= US Buyer
Occurs More Often
0 20 40 60
Percentage of Respondents
Occurs With the Same Frequency Occurs Less Often
80
N = 1073
Survey: Q4 2009, Economic Impact on IT Services Buying
100

Growth Creation Growth Maturity
I - Onsite
"Staff Aug"
II - Offshore
III - Global
Sourcing
IV - "Just"
Sourcing?
India
"Emerging
Megavendors"
Global
Sourcing is
Mainstream
Country &
"Value Chain"
Competition
Fully Integrated global process optimization
CMM
Level 5
"Body
Shopping
"
Y2K From “Offshore” to
“Nearshore and
Offshore”
1979 1998 2008 2020?
Time

• Low-cost onshore or global delivery is a factor for all major commercial provider's strategies
• Top 10 leaders account for 27.3% of market
• Average annual growth rate (2009 vs 2008) of top 10 leaders = -2.3%
• Average annual growth rate (2009 vs 2008) of all other providers =
-4.7%
• 92 providers have more than $1 billion in total IT services revenue All Others
73%
Worldwide IT Services, 2009 Market
Share Leaders ($776.5B)
IBM(-6.6%)
7%
HP(-10.4%)
5%
Fujitsu
(-0.4%)
3%
Accenture
(-11.8%)
3%
CSC
(-6.5%)
2%
Lockheed
Martin
(3.1%)
2%
Capgemini
(-8.7%)
2%
NTT Data
(7.2%)
1%
NEC (4.5%)
1%
SAIC
(6.3%)
1%
Source: Gartner IT Services Market Share Analysis,
2009 - (X%) indicates provider's annual growth:

Americas:
Argentina
Brazil
Canada
Chile
Costa Rica
Mexico
Uruguay
Europe, the Middle
East and Africa:
Czech Republic
Egypt
Hungary
Ireland
Israel
Morocco
Poland
Romania
Russia
Slovakia
South Africa
Spain
Ukraine
Asia/Pacific:
Australia
China
India
Indonesia
Malaysia
New Zealand
Philippines
Singapore
Thailand
Vietnam
Note: Reflects new Gartner Country analysis, October 2009

Providers
Marketing/
Brand
Global Delivery Model
Skillsets
Methodologies
Credible
Scale
Industry/Domain Expertise
IT Industry Labor
Pool
Education/IT
Alignment
IP Protection
Country
Success
Language Skills
Technology
Skills
Industry Associations
Country
Legal System
Cultural Compatibility
Infrastructure
Costs
Education System
Government
Support
Politics and Economy

Accelerating Trend: China – The Other Global
Delivery Center
• China has emerged as one of the most frequently discussed offshore locations in
Asia/Pac for global delivery diversification
• Government support in developing offshore IT services from China strong, through tax incentives (7% tax rate), subsidies, guaranteeing benefits, capital injections
- Ministry of Commerce Thousand-Hundred-Ten plan supports growth of outsourcing providers
• Quality of labor pool improving, with plans to train 1.2M new skilled IT workers from
2009 to 2013 —areas of expertise in testing, coding, embedded software development, application development, and basic data analysis
• China’s English proficiency has been on the rise since 2004—today written English considered acceptable, however still marginal in conversation for business needs
• Infrastructure near global standards —big competitive edge versus India
• Wage rates competitive, particularly at entry level; lower employee attrition
•
Communist government in China showing stability, focus on high levels of GDP, financial systems improving
—needs to improve transparency and reduce corruption
• Foreign direct investment, trading alliances basis for improving cultural compatibility
• Financial support from government for vendors that reach CMM certification
• Progress on IP and data protection, but remains challenge due to lack of enforcement
10

Staff Augmentation Project Work
Systems integrator
BOT
Joint Venture
Captive Center
On-Site
Onshore
Nearshore
Offshore
Outsourcing/
Strategic Sourcing
There are multiple options for buyers. Relationship choices must link directly to the commercial arrangements (rate cards, SLAs, performance etc.)

Hypercompetition
• Pick up in demand — but we expect fits and starts
• Cost-based decisions
• Many providers chasing any opportunity
(revenue)
• Vendor fundamentals:
Profitability,
Restructuring,
Downsizing,
Rebalancing
• India-based providers experience slowing growth
• New players in services
Consolidation
• Traditional approaches and organic growth may be insufficient to keep revenue on target
• Acquisitions: HP/EDS,
Tech Mahindra/Satyam,
Oracle/Sun, PWC and
Deloitte/BearingPoint,
Dell/Perot, Xerox/ACS
… and expect more
• European companies — likely targets
• Providers in solid cash positions will be favored to advance via strategic acquisitions
Innovation
• Systemic changes in
IT sector require responses
• Growth rates for new industrialized services
— SaaS, Cloud — exceed the market growth rates
• Leaders invest to reposition and catch early wave — timing is critical
• Management discipline and long-term view to navigate an extended recession

Business Value-Add
Optimization
Business
Strategy
Consulting
Custom BPO~HR~
Logistics~F&A
IT Consulting
Custom Solutions
ERP~SCM~CRM~BI
CRM Call Center
Creation
Vertical/Process-
Specific Business
Process Utility
Horizontal Business
Process Utility
App. Develop.
& Integration Transaction
Processing
SaaS
Cloud-Based
Business Process
Services
Enterprise
One-to-
One
App. Mgmt.
Data Center
Outsourcing
Remote
Managed Services
Delivery
Cloud-Based
Application
Services
Shared
One-to-
Many
Desktop Management
Network Services
Hosting/
Collocation
Storage on Demand
Infrastructure
Utility
Cloud-Based
Application
Infrastructure
Services
Help Desk Outsourcing
Management
Network Utility
Access
Cloud-Based
System
Infrastructure
Services
IT Efficiency

Supply Side
Multicountry options
Global provider landscape
Increasing range of services
Resource management
Alternative Delivery
Models
Demand Side
Balanced portfolio of country choices
Provider selection complexity
Portfolio optimization in a global model
Global sourcing competencies
Customization/labor-based versus Automation

Trends in Global IT Delivery and Management
Sandra M. Notardonato
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.
© 2010 Gartner, Inc. and/or its affiliates. All rights reserved.