After taking a severe drop in 2009, the number of organizations outsourcing application maintenance work has risen over the past two years to near pre-recession levels.
According to our study, Application Maintenance Outsourcing Trends and Customer Experience, 37% of organizations outsourced some application maintenance work in 2011, Figure 1 shows. That is slightly below the 40% frequency in 2007, but well above the 27% recorded in 2009, at the height of the recession.
The decline in 2009 closely tracked a similar downturn in the frequency of application development outsourcing. One possible explanation is that as organizations reduced development work, they diverted internal staff resources toward maintaining existing systems, displacing the services of the outside service providers.
While IT capital spending has yet to fully recover, IT organizations are beginning to increase spending on upgrades and maintenance. The rise in application maintenance outsourcing over the past two years is helping postpone the need to hire additional staff, a step that should occur once it is clear whether the recovery will remain on track.
Application maintenance is one of the most popular IT functions to turn over to outside service providers. The full study examines application maintenance outsourcing adoption trends and customer experience. We report the percentage of organizations outsourcing application maintenance (frequency), the average amount of work outsourced (level), and the change in the amount of work being outsourced (trend). For customer experience, we show how many IT organizations successfully lower costs or improve service by outsourcing application maintenance. Finally, we look at the popularity of offshore-outsourcing this function.
This Research Byte is a brief overview of our report on this subject, Application Maintenance Outsourcing Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).