Aug 29, 2005 (02:08 PM EDT)
Cost Savings Becomes Main Driver For Outsourcing App Dev

Read the Original Article at InformationWeek

Cost savings has surpassed seeking special expertise as the main reason companies outsource application development projects, a research firm said Monday.

Fully 28 percent of the companies surveyed by Evans Data said cost savings was the main reason to outsource, up from 15 percent five years ago. On the other hand, 19 percent of the respondents said they outsourced to take advantaged of special expertise, down considerably from 44 percent in 2000.

In addition, a third of the respondents said they expected their companies to increase the use of outsourcing next year, and only 6 percent said they expected to decrease outsourcing. Forty-five percent of the companies said they outsourced less than a quarter of their development, while only 7 percent said it was more than 50 percent.

For many companies, outsourcing has become a way to reduce the cost of lower level programming, the research firm said.

Other findings included that 61 percent of enterprises have increased their IT budgets this year, up from 53 percent a year ago. Only 10 percent plan to cutback spending.

Larger enterprises hang on to their applications much longer than smaller companies. Nearly half of enterprises run their applications for more than five years, compared with 29 percent of small and medium-sized companies.

Almost 60 percent of corporate developers intend to use open source code in the next year, and 54 percent plan to mobilize business processes to allow remote access to mission-critical applications.

Evans Data based its findings on an August survey of nearly 400 developers working in companies of 1000 or more employees. The companies were both U.S. and foreign companies.