Network Operations Outsourcing Poised to Grow

September, 2017

Network operations outsourcing is still one of the least-frequently outsourced functions that we track in our annual IT Outsourcing Statistics  study. However, that may change soon. Very good service success and decent cost success, along with the increased complexity of networks, has more organizations looking hard at outsourcing some or all of their network operations.  

As shown in Figure 1 from our full study, Network Operations Outsourcing Trends and Customer Experience, the net growth trend—the percentage of organizations increasing the amount of work they outsource during the previous year minus the percentage decreasing the amount of work outsourced—is high. The volatility, the measure of how many organizations are changing the amount of work outsourced, either up or down, is also high. Combining those two numbers, the  outlook looks strong for growth in network operations outsourcing.

NetworkOp fig 1 - Network Operations Outsourcing Poised to Grow

Other data from the figure shows that frequency (the percentage of respondents that outsource network operations) and the level (the percentage of work that is being outsourced) are both low. As previously mentioned, service success (the percentage of those outsourcing who say the service is the same or better than if they had kept the function in-house) is high. Cost success (the percentage of those outsourcing who say the cost is the same or less than performing the service in-house) is moderate.
Networks are becoming more complicated as IT departments invest in more use of video, unified communications, software as a service, and public cloud infrastructure. Software-defined networking and security issues in the network also put pressure on companies to find new and varied skills to maintain the network. As networks become more complicated, it is more attractive to outsource some or all of network operations in order to access the latest skills.

“As networks become more complicated, it isn’t a surprise to see service success increase as it has recently,” said David Wagner, vice president, research for Computer Economics of Irvine, Calif. “It is more difficult to stay ahead of the curve when it comes to in-house skills. We’re seeing companies commit to more outsourcing in general in order to concentrate on mission critical services. Because of these factors we would expect to see network operations become a candidate for more outsourcing in the near future.”

To help IT executives understand their options, the full study examines adoption trends in the outsourcing of network operations. We report on the percentage of organizations outsourcing network operations (frequency), the average amount of work outsourced (level), and the change in the amount of work being outsourced (trend and volatility). We also present the cost- and service-success ratings, which provide insight into the potential risks and rewards IT organizations take in turning to outside service providers. We show how these trends differ by organization size and sector and provide recommendations for engaging with network operations outsourcing service providers.

This Research Byte is a brief overview of our report on this subject, Network Operations 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).