Survey and Research Data 

Managed Services and Security Breaches

The International Association of Outsourcing Professionals stated [13] that more than 90% of respondents to a 2006 survey felt that outsourcing security breaches would be “catastrophic“ to their businesses, and 45% were more, or much more, concerned about data security than a year ago. A 2006 Booz Allen Hamilton survey of 158 executives asked the following: “When evaluating, or managing, outsourcing relationships, how concerned are you about the following types of security threats? (The percentages shown are those responding in the “very important” category.)

• (64%) Theft, misuse or damage of company systems and data from outside the outsourcer, e.g., system hacking, viruses, spy-ware infiltration
• (62%) Theft, misuse or damage of the company systems or data from inside the outsourcer
• (35%) Theft or damage of data or assets via compromises of physical security, e.g., break-ins or vandalism
• (35%) Compromise of operating continuity because of external factors, e.g., natural disasters, political instability. [13]

Indian Outsourcers Experience Strong Growth

In 2007, the National Association of Software and Service Companies (NASSCOM) reported [14] the following concerning outsourcing services provided by Indian organisations: India’s three largest outsourcing firms, Tata Consultancy Services Ltd., Infosys Technologies Ltd., and Wipro Ltd., reported strong revenue and profit growth for the quarter ending 31 December 2006. NASSCOM projected exports totalling US$18 million in IT services (including software development), US$8.3 billion in business process outsourcing and call centre services, and US$5 billion in engineering services, research & development, and product development work for the fiscal year. Employment in the country’s software and services sector is likely to reach 1.6 million by 31 March 2007, up from 1.28 million in 2006. [14]

Managed IT Services Have Wide Application

A Web survey was conducted in 2006 by CMP Media concerning the use of IT managed services in the USA.  330 responses were received from small, medium and large companies across all industry segments, including non-profit organisations and governmental agencies. The following describe [15] the reported use of managed IT and network services:

• Traditional managed voice network services (56%)
• Managed Web Services (52%)
• Traditional managed data network services (47%)
• Managed email/messaging services (37%)
• Managed converged/IP data services (30%)
• Managed back up/recovery/ business continuity services (28%)
• Managed application services (27%)
• Managed security services (26%)
• Managed desktop LAN and helpdesk services (23%)
• Managed content delivery and other Web optimisation services (22%)
• Managed storage services (20%)
• Managed customer contact centre services (20%)
• Managed converged/IP voice services (18%). [15]

Managed Services – Security Policies Rank Highly

In a 2005 US Booz Allen Hamilton (BAH) IT Outsourcing survey [16], 158 senior executives from a variety of companies rated the most important factors for evaluating outsource partners as follows:

• The top three concerns were capabilities, pricing, and security policies
• Security and pricing were almost equally ranked with 85% being willing to pay 10 to 15% more for stronger security
• 75% of respondents considered security risks to be moderately or much higher when using an offshore provider
• Cyber-threats, e.g., the theft of data from outside or inside an outsource provider, were ranked almost twice as highly as physical threats, such as break-ins or vandalism, or those caused by natural disasters. [16]

Outsourcing IT Is Not Always Successful 

A 2003 US study of 116 outsourcing decisions revealed  [17] that:

• 38% of outsourcing arrangements were successful
• 35% were failures, and
• 27% produced mixed results.

A further US study, involving 207 IT outsourcing relationships, indicated that:
A) Activities outsourced were:

• Application Development/Maintenance (46.4 %)
• Data Centre Operation/Facilities Management (16.4%)
• Telecommunications/Network (12.6%)
• Systems Integration (11.6%)
• End User Support/Help Desk (7.2%)
• Training & Education (1.9%)
• Other (3.9%).

B) Length of Contract was (Years):

• Less than 1 (17.1%)
• 1 to 2 (30.0%)
• 2 to 4 (27.1%)
• 4 to 6 (15.5%)
• Over 6 (8.7%)
• Unknown (8.7%).

C) Contract Amounts were:

• Less than $50,000 (11.6%)
• $50,000 to $100,000. (11.6%)
• $100,000 to $1 mil. (33.3%)
• $1 mil. To $10.0 mil. (24.2%)
• $10 mil. To $100 mil. (7.2%)
• Over $ 100 mil. (3.9%)
• Unknown (8.2%) [17]

Outsourcing IT in the Public and Service Sectors 

In 2003, Benchmark Research in the UK conducted a survey of more than 100 organisations that used external service providers for IT applications. The study revealed [18] that, in the private sector, less than 33% used a formal system to measure the success of IT provision, compared with 53% of public sector organisations. 58% of public sector organisations used customer satisfaction as a benchmark, compared to 51% in the private sector. 29% public sector organisations entered into a pay-by-results agreement with their external provider, compared to 22% in the private sector. 40% per cent of private sector respondents intended to adopt a pay-by-results arrangement in the future.

Expected benefits from external IT service provision and percentages in each sector were:

1. Lower costs of IT: 53% of private sector organisations and 36% of public sector organisations
2. Greater control of costs: 42% and 31% respectively
3. Improved IT service levels: 56% and 36% respectively
4. Access to specialist support: 53% and 42% respectively
5. Ability to concentrate on core business: 53% and 29% respectively
6. Free up IT staff for other projects: 42% and 20% respectively.

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