The research firm has forecasted continued strong growth in public cloud services and says that end-user spending on public cloud services will grow 18 percent in 2013 to $131 billion.
Established offshore providers will face stiff competition from labour-intensive offshore providers. Competitive edge can be gained by increased investments in cloud-based services and by maintaining a balanced portfolio of managed services.
These providers will also have to use traditional delivery approaches and offer horizontal as well as vertically-based cloud offerings.
Keeping all these factors in mind will help these offshore providers to successfully compete with reputed and successful multinational providers as they will be equipped to address the changing demands of buyers.
“For broad-based offshore providers that operate in multiple geographies, industries and service lines, and who seek to compete for significant ‘wallet share’ in major accounts, strategic investments in cloud-based services are mandatory,” said Ian Marriott, research vice president at Gartner.
Risks for offshore services growth
Offshore services revenue growth will be hampered if the service providers are slow and not able to decide on investing in migrating to the cloud.
The volume of traditional and customised services will go down because of increase in the use of industrialised services. However, these offshore providers can expect new revenue from investments in cloud-based services.
Gartner has noticed a decrease in the initial resistance to public cloud as customers now recognise its efficiencies as the solutions have become mature.
But offshore service providers will have to adapt to changing market demands, otherwise they can be displaced from the race to the top.
“The consequence to offshore providers of not responding to such significant market changes will be the deterioration of market share, acquisition by another provider, or its disappearance from the offshore services landscape,” added Marriott. “Having the right number of the right quality people in the right places, when combined with a non-linear growth strategy, will deliver improved revenue per employee.”