Fifty-three percent of organizations in Europe said they will outsource more in 2010, and 40 percent of organizations are planning to increase their external IT services spending, according to a recent survey from Gartner, Inc.

The survey found that the percentage of organizations spending 50 percent to more than 75 percent of their IT spending on external service providers is on the rise. “However, the results also showed that the pressure on capital and IT operating expenditure is still strong, and European organizations expect providers to deliver further cost reductions,” said Claudio Da Rold, vice president and distinguished analyst at Gartner. ”Although 40 percent of respondents said that they will increase the external share of their budget, only 24 percent said that they will increase the budget for providers, and almost a quarter of organizations still expect that their IT services budget will continue to decrease in 2010.”

The online survey was conducted among 206 organizations in Europe during in the first quarter of 2010. The survey was directed at individuals who were involved in decision making on outsourcing and IT services in 2010.

The survey also showed that organizations of all sizes and with IT budgets of various magnitude are now showing an interest in outsourcing. It found that 14.7 percent of organizations with IT budgets of less than €1 million expressed interest in outsourcing, which compares to only 6.1 percent of organizations in this category in 2009.

In times of recession, organizations usually concentrate on cost cutting and optimization, followed by a recovery period with a clear focus on business growth and operating competitively. In Europe, things appear to be more complex. Although respondents in Europe are still focusing on cost control when defining their goals for outsourcing and service provider relationships, they increasingly require access to resources and capabilities, flexibility and scalability. “This means that 2010 is bringing sourcing strategists in Europe a more complex set of business requirements that aren't easier to address,” said Mr. Da Rold.

After a few years of continuously increasing interest in industrialized services based on alternative delivery models, such as software as a service (SaaS), cloud computing and infrastructure utility (IU), interest among European organizations has peaked, while adoption is on the rise. For example, SaaS and IUs’ implementations were up 6.1 percent and 5.1 percent in 2010, respectively.

“Organizations in Europe are expecting - or are in need of - growth, but they are also still highly cautious,” said Mr. Da Rold. “Although we conducted this survey in the first quarter of 2010, before the start of the Greek financial crisis, we believe that the cautious expectation of growth will continue in Europe beyond 2010. Regardless of the future direction of the economy, European businesses and their service providers need to optimize their multisourced environments, while increasingly adopting industrialized IT services.”