Application Maintenance Outsourcing Goes Flat

March, 2016

About half of all IT organizations are outsourcing application maintenance work today, a rate that has remained nearly unchanged over the last four years.

Application software maintenance may not be sexy, but it is a critical task for every organization. As the complexity and cost of applications grow, and as legacy applications require more rework, application maintenance and related functions such as application performance management and application life-cycle management pose a key challenge to IT departments grappling with resource limitations. Outsourcing these functions needs to be considered as a potential strategy for reducing costs, improving service levels, or simply freeing up in-house resources to focus on more pressing tasks.

1 AppMaint fig 2 - Application Maintenance Outsourcing Goes Flat

However, as shown in Figure 2 from our study, Application Maintenance Outsourcing Trends and Customer Experience, the percentage of companies outsourcing this function stood at 53% rate in 2015, or about where it has remained since retreating from its post-recession high of 71% in 2011. Once IT organization began increasing their internal staff headcount this is one function that many organization began bringing back in-house.
Application maintenance typically involves monitoring and managing a software application. More specifically, this function includes viewing a specific application’s performance within its context; compiling statistics about its performance; analyzing how effectively it can detect problems before they emerge; and diagnosing any shortcomings that may be revealed. Such specific reporting about an application’s performance is an expensive and complex procedure.

Another reason application maintenance outsourcing can be appealing is that as legacy applications age, the labor required to patch and maintain unwieldy code rises. Meanwhile, the growth in the number and complexity of the applications organizations use today sometimes makes it attractive for IT departments to turn to outside partners.

The full study examines application maintenance outsourcing adoption 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). We also assess the customer experience by showing how many IT organizations successfully lower costs or improve service by outsourcing application maintenance.

This Research Byte is based on 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).