Introduction

The Infrastructure Outsourcing (IO) market continues to evolve with offshore suppliers entering the market through labor arbitrage, enabled by remote infrastructure management (RIM) technology. The continued maturity of the remote infrastructure management outsourcing (RIMO) suppliers’ offerings leads to a strategic dilemma facing IO suppliers. Leading RIMO suppliers realized this dilemma and started indicating their strategic directions. This led to a certain degree of convergence of various infrastructure models in terms of their target buyers and deal characteristics (e.g., deal sizes). In spite of this superficial convergence, the underlying dynamics of the value proposition of RIMO and traditional suppliers remain very different.

Scope 

• Data-driven analysis of the evolution of different models in the IO market
• Analysis of the key differences between infrastructure service delivery models
• Overview of likely IO suppliers’ strategies based on their market signals   

Contents

This report is divided into three sections. The first section provides a background to the continued evolution of models in Infrastructure Outsourcing. The next section discusses the increasing maturity in the RIMO model and signs of convergence with IMS and traditional IO models. The final section – ‘IO supplier’s strategic dilemma’ – describes implications for both RIMO and IO suppliers in terms of the strategic choices available to them, and the emerging dilemma therein. This section elaborates on the following key insights:

• The evolution of service delivery models in IO results in increasing convergence between various models, leading to emergence of four flavors of IO: Traditional approach, converged offering, RIMO model with added value, and pure RIMO strategy with labor arbitrage as a primary lever
• Increasing level of model convergence in IO introduces strategic dilemma for RIMO suppliers
• Traditional suppliers of IO have more limited options, but they are no less challenging: Invest in large deal pursuits, develop a differentiated and converged RIMO/IMS offering  or develop RIMO offerings of their own

The report discusses four basic strategies in-depth and also provides eight case studies of different suppliers and how they react to changes in the market.