Companies in Brazil, having perceived the advantages of the service beyond the objective to reduce operational costs, are adopting more complex and complete IT outsourcing services. Moreover, the mid-market segment is increasing its participation in the outsourcing space and is becoming a target to IT infrastructure outsourcing providers, mainly data center competitors with offerings such as co-location, shared and dedicated hosting.
New analysis from Frost & Sullivan (ITservices.frost.com), Brazil IT Infrastructure Outsourcing Services Markets, finds that the markets earned revenues of $1.1 billion in 2006 and estimates this to reach $3.3 million in 2012.
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The introduction of open communication networks and the prospects of remotely managing and maintaining network elements and applications are contributing to the commendable growth of the IT infrastructure outsourcing services markets.
“IT outsourcing also allows for reduction in operational expenses as it prevents of high upfront investment in technological equipment and qualified technical personnel, access to newer technologies among others”, notes Frost & Sullivan Team Leader Research Analyst Marcelo Kawanami.
This is generating substantial revenues in the market as customers have higher expectations and are constantly demanding substantial results from the infrastructure-outsourcing project in terms of efficiency and cost reduction.
However, convincing a potential client to trust in a third-party provider to take care of internal vital and confidential information is one of the biggest challenges service providers face.
When hiring an infrastructure-outsourcing provider, customers mainly consider the quality of services, capability to accomplish the service-level agreements (SLAs) agreed, trustfulness and success cases in the market. Hence, the main providers in the market are increasingly trying to reach a level of excellence in their services, pursuing robust and full outsourcing contracts.
“Competition in this market has increased due to the presence of many participants with diversified services portfolios”, explains Kawanami. “Hence, IT infrastructure outsourcing providers are looking for complete end-to-end outsourcing contracts, bundling high-margin services to overcome the price deflation in the market”.
On the demand side, the finance, telecommunications and Government sectors are in some way more advanced in outsourcing theirs IT services. However, in the upcoming years, these verticals are likely to enhance their adoption of new services due to regulation issues, along with the entry of other major vertical markets such as retail and health care as important clients.
As basic services such as co-location and hosting become more commoditized, network management is likely to continue capturing clients, along with a gradual increase in the adoption of storage and disaster recovery/business continuance services, especially in those businesses with more critical processes.
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