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Application Outsourcing: Tactical and Strategic Benefits, Trends, and Recommendations
IDC Executive Brief, December 2010

Amid a volatile and slowly recovering U.S. economy, companies remain under pressure to drive tighter alignment between IT and business goals. There is an urgency not only to increase operational efficiencies at lower costs but also to enable business growth with the use of agile processes and scalable IT platforms. This business imperative demands smart usage of new technologies combined with talent that is seasoned in the sophisticated implementation and management of IT assets. Application outsourcing (AO) is one enabler that is being consistently recognized for its value in lowering TCO and expanding geographic reach while leveraging the technology, industry, and process expertise of the service provider. IDC market analysis notes a strong resurgence in AO contract deals in 2010, with worldwide spending on application outsourcing services expected to reach nearly $51 billion by 2014. Executives are embedding phased portfolio optimization, enhancement, or systems integration work as additional value-adds within such engagements.

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