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Infrastructure rationalisation/server consolidation, Web site design, HR applications, ERP and CRM are some of the other services that would be outsourced in the current year in a major way.

Kochi , Sept 5

THE demand for outsourcing process change/re-engineering work has recorded the biggest growth among the services that US-based companies plan to outsource in the current year, a survey by Forrester has found.

Forrester found that 34 per cent of those surveyed said they plan to outsource business process change/re-engineering work, as compared with 24 per cent in 2004. The survey was conducted among end users of IT and IT services.

Demand for consulting and systems integration services increased or remained stable for almost every type of services, the survey has shown.

Clients look for industry expertise and domain knowledge as the two most important factors to hire a vendor for these services as 39 per cent and 36 per cent respondents indicated so. Price came only the third aspect in hiring a service provider.

The biggest drop in demand is for architecture design/planning - only 18 per cent of respondents said they would outsource this service as compared with 31 per cent in 2004.

Infrastructure rationalisation/server consolidation, Web site design, HR applications, ERP and CRM are some of the other services that would be outsourced in the current year in a major way.

The survey has revealed that billing rates have stabilised this year, reversing the past two years' trend to fall. "Two years ago, rates were still dropping, but this year out research indicates that time and material rates have stopped falling," Forrester said.

Rates are even showing a slight increase when it comes to consulting and systems integration.

In the case of consulting, rate increase in certain areas is driven by a few practices and there is no across-the-board increase in consulting and systems integration.

"Clients buying services such as process change, SAP implementation, compliance, and risk management are likely to pay higher rates than those purchasing IT strategy or CRM implementation, given that these services are less in demand, for example," Forrester said.

Ongoing new development work, individual applications and telecom network remain this year also as the top three options for outsourcing, the survey has found.

In the case of application outsourcing, companies are looking for domain expertise as their top decision making criteria while price comes a second, followed by industry expertise.

But in the case of infrastructure outsourcing, price is still the most decisive factor, the survey has found. Overall, the demand for outsourcing will continue in 2005 as in the past years, Forrester said.

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US cos keen on outsourcing process change: Forrester

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