COMPUTER BUSINESS REVIEW

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Issue Date: May 2007

Growing in number and complexity

1 May 2007
Allan Wattrus, business development manager at Unisys Africa

South African organisations are increasingly looking at different models that maximise the benefits technology has to offer business processes.
Managed services and outsourcing in the IT market became fashionable in the late 1980s and have grown steadily since, maturing into a market geared toward enabling cost savings through business process improvement.
Gartner projects that, over the next 18 months, 50% of all outsourcing deals will be done in Europe, the Middle East and Africa. However, these markets are not all at the same level of maturity. In Europe some countries are experiencing rapid market growth, while African markets are still in the establishment phase.
Today's growth in the managed services and outsourcing market is the result of a combination of economic circumstances, labour protection laws, service costs and efficiency benefits.
Economic pressures continue to provide the market with the impetus needed to turn to managed services and outsourcing to improve efficiencies and reduce costs; the South African market is developing quickly. There is an increase in the middle-income class; businesses are growing rapidly; and entrepreneurship is strong. As a growing market, South African organisations are increasingly looking at different models that maximise the benefits technology has to offer business processes, and they are beginning to appreciate the value of the managed services and outsourcing model.
Changing shape of deals
Still in their infancy in developing countries, managed services and outsourcing deals will continue to change shape in a drive to sustain growth. In the early days, organisations undertook wall-to-wall outsourcing; they handed the management of their entire IT infrastructure to a single third party. Today, however, deals are increasingly structured around partnerships, multisourcing, co-operative and consortium bids, where members work together to provide the necessary outsourced services based on individual strengths.
Gartner believes this change in the shape of deals is a result of organisations being more knowledgeable about what is available, what is on offer, and what they need. There is also an increased reluctance to put all corporate eggs in one basket and then suffer major operational problems should things go wrong.
Consortium-type deals have levels of complexity that are unavoidably a part of companies working together. They require strong buying skills; market trust and credibility; and market recognition.
Heading in that direction, South Africa is witnessing an array of deal and bid structures leading the managed services and outsourcing market to maturity.
Allan Wattrus, business development manager at Unisys Africa
Allan Wattrus, business development manager at Unisys Africa
For more information contact Beryl Banwell, Unisys Africa, +27 (0)11 233 4000, beryl.banwell@za.unisys.com


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