Application Maintenance Outsourcing Reaches New Normal

April, 2014

A little more than half of all IT organizations outsource application maintenance work today in what appears to be a new normal in the outsourcing frequency rate for these services following the post-recession recovery cycle.

The percentage of organizations engaging in application maintenance outsourcing stood at 55% in 2013, exactly the same as it was in 2012, as shown in Figure 2 from our study, Application Maintenance Outsourcing Trends and Customer Experience.

AppMainOutsourcingFig 2 - Application Maintenance Outsourcing Reaches New Normal

The percentage dropped significantly from 71% in 2011. This is a recovery pattern that is not unique to application maintenance. It reflects the recovery in IT spending from the worst of the recession, followed by a stronger confidence in the economic recovery and a greater willingness to hire in-house workers. While the surge in outsourcing frequency has ended, there remains a willingness to outsource this function.

Application software maintenance is a critical and central task for every organization. While hardware has become less expensive to procure and maintain, software maintenance consumes a rising portion of the IT budget. As the complexity and cost of applications grow, and as legacy applications require more and more rework, application maintenance and related functions such as application performance management and application lifecycle management pose a key challenge to IT departments. Outsourcing these functions is a potential strategy for reducing costs or improving service levels.

In the full study, we examine 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 a brief overview of our report on this subject, Application Maintenance Outsourcing 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).