Outsourcing or in-house IT?

[dan at geer.org]

Computer Outsourcing Deals Fall
By GARY MCWILLIAMS 
Staff Reporter of THE WALL STREET JOURNAL
October 17, 2005; Page B7

Computer outsourcing deals tumbled for the third quarter in a row and
are heading for a 10% to 15% drop in value this year, a consulting
company is expected to report today.

Technology Partners International Inc., a consulting company that
publishes a quarterly index of outsourcing deals, cites declines in
contracts of more than $1 billion and a reduction in business-process
outsourcing deals for the sharp drop.

The Woodlands, Texas, consultants expect total deals this year will drop
to between $60 billion and $65 billion, from $72 billion last year. The
report suggests stiffer competition ahead for such companies as
International Business Machines Corp., Computer Sciences Corp., and
Electronic Data Systems Corp. that compete in the $400 billion computer
outsourcing market.

Deals valued at $1 billion or greater are expected to slip to 15 this
year, from 19 last year. The average term of outsourcing contracts has
slipped to six to seven years, from seven to eight years.

TPI said it expects a wave of contract expirations to shape the market
in the coming year. Deals signed in the 1990s by Ameritech, Bell Canada
and Textron, among others, are due to expire next year. About 70% of the
$40 billion in contracts are held by IBM, Computer Sciences and EDS.