Research from Computer Economics in North America has shown that mid- and smaller sized companies are embracing IT outsourcing. Report Author Frank Scavo says “These findings suggest the outsourcers are doing a much better job of communicating their value proposition into the small and mid-market. That’s interesting because while traditionally we tend to think smaller companies are willing to try new things, in this market at least, they are surprisingly conservative.”

Irregular Enterprise has produced a useful summary of the key findings of the report:

• Outsourcing services gaining the most strength among customers include help desk, desktop support, data center operations, and website/e-commerce systems outsourcing. Large organizations, in particular, are making greater use of help desk outsourcing.

• Outsourcing services making the smallest gains are application maintenance, application development, and data network operations service providers. Application development, while still the single most frequently outsourced function, is losing ground in the current economic environment as organizations cut back on project-based work.

• The three most popular IT functions to outsource include data center operations, disaster recovery, and website/e-commerce systems. These IT functions are both frequently outsourced and outsourced at relatively high levels compared to other functions in this study.

• The typical IT organization spends about 5% to 6% of its total IT budget on outsourcing services. This is true regardless of the organization’s size.

• IT organizations are experiencing the most cost overruns with application development, website/e-commerce systems, and data network operations outsourcing contracts. They have the easiest time predicting costs for IT security, voice network operations, and data center operations outsourcing contracts.

• Application development and application maintenance are most-frequently offshore outsourced IT functions, while disaster recovery services and IT security are the two functions least likely to be sent to offshore service providers.