Separate research from market analysis firm IDC has found that
the outsourcing market in western Europe is shrinking, with just
$40.5 billion spent last year as opposed to $42.1bn in 2004.
Any deals abroad need to be carefully monitored, said Gartner.
"Many organisations that are looking to establish global
outsourcing contracts with foreign providers mistakenly believe
that the terms and conditions are about the same as onshore
contracts with in-country service providers," wrote Gartner analyst
Helen Huntley in the report. "Outsourcing contracts structured with
in-country providers will not work as templates for global
outsourcing without significant modification."
The easiest places in which to structure a water tight contract
are those countries with major experience in outsourcing, such as
India. "The greatest risks for global outsourcing come from
emerging countries that are early entrants into outsourcing,
or those that have limited governmental support, ineffective legal
enforcement, immature infrastructure, limited or nonexistent
intellectual property protection or lack an understanding of
foreign laws," wrote Huntley.
The most important areas to protect through a contract are
security and confidentiality, legal compliance, fees and payment
terms, proprietary rights and auditing rights, said the report. It
warned that the legal systems in other countries might claim
jurisdiction over any agreement regardless of which system the
contract specifies, and that other legal systems might have little
respect for intellectual property rights.
There are significant sums at stake, and according to IDC, the
market for outsourcing is significant. That firm has found that the
100 biggest outsourcing deals in western Europe were worth $40.5bn
last year. Over three quarters of that sum was accounted for by
deals in information systems, network and desktop outsourcing.
The total sum is down on the 2004 figure, though IDC said that
the value of the biggest deals is rising. Nine megadeals
represented half of the total spending, said an IDC statement, and
five of those deals were awarded by just two government
agencies.
IBM won more contracts than anyone else, but BT and EDS each
out-earned IBM in outsourcing, said the IDC statement.
