CIOs in 2012: More Outsourcing of Software Development, Analysis, Datacenter Services

BRAZILIAN CIOs HAVE SPENT THE PAST YEAR identifying solutions that can be outsourced to improve their business bottom lines, and spent a lot of time studying cloud computing as well. The year to come will be marked by further confirmation of outsourcing solutions, deeper exploration of cloud technology, and consumerization of IT, according to the consulting company Frost & Sullivan (F&S).

Fernando Belfort, senior market analyst at F&S in Brazil, says the trend for 2012 will be CIOs seeking more and more help from outsourcing providers in the areas of analysis, consulting, and integration, as well as software development and cloud management. It should be a good year for companies that provide those services.

“Brazil is, no doubt, the most prepared country in Latin America to offer outsourcing solutions for its own IT industry,” Belfort says. “We have big- name providers, such as IBM, HP, and Unisys, that deal directly with the large-scale companies; mid-size ones, focused in the middle market, such as Tivit; and then innumerable ones focused on smaller business.”

According to studies by the consulting company, the IT services market in Brazil should grow around 9.9% in 2012, reaching a total value of about US$12.9 billion – an expectation that goes way beyond what is projected by analysts for the country’s GDP, which is expected to be about 3.5% in the best-case scenarios.

When it comes to cloud computing, Belfort says that the next year will be the beginning of CIOs implementing systems they have been studying for the past two years. “There still is a lot of misinformation about cloud solutions. In a survey we did with 50 CIOs from large companies, only 10% considered that they have excellent knowledge of the topic,” he says.

(As we reported earlier, other researchers have also found that lack of knowledge about cloud technology is a persistent fear among Brazilian IT executives. Not everyone expects a Brazilian rush to the cloud within the next 12 months, due to several concerns shared by CIOs.)

Datacenter services should continue to reflect impressive numbers in 2012. In 2011 that segment evolved into a US$1.4 billion industry, a 13% increase compared to 2010, and the expected growth for 2012 is 11%, according to F&S figures. That market is being heated up by acquisitions done mostly by companies based in the United States and in Europe.

In 2011, 25.9% of the datacenter services were provided to the financial sector, followed by 22.1% for IT & Telecom, and 21.3% for the manufacturing industry. In the near term, F&S advises that the most opportunities could come from dedicated hosting and contingency services or disaster recovery.

Will IT Consumerization Catch Fire?

“Consumerization is not a trend, it is a reality,” according to an IT manager quoted in a Frost & Sullivan presentation shared with Sourcing Brazil. But have most IT managers gotten the message?

Belfort defines IT consumerization as an organization providing technical resources to employees – or allowing employees to use their own preferred gear, such as mobile devices. Another way of looking at it, as defined by Paulo Camara of Ci&T, is “consumer devices making their way into IT environments.”

Belfort cites the example of a company giving a laptop to a manager and telling him he will own the machine after one year of use. “By doing this, the tendency is that the person will take better care of the machine,” Belfort says.

His view is that IT consumerization is here to stay, even though most CIOs are not yet familiar with the term, and many IT companies have not yet embraced the concept. But that might change in 2012, he says.