Despite the downturn, global services spending is on the cusp of a substantial increase and CIOs must learn to grasp the opportunities this presents, said Gartner analysts at today's Outsourcing summit keynote address in London.

The closing presentation identified the challenges that will determine the CIO's role over the next few years, and how these will impact on enterprise outsourcing strategies. Externalisation, the primacy of business, globalisation, the internet, legacy modernisation, green IT, and global sourcing will be the critical factors for all IT-enabled business, said analysts.

Gartner said that, despite the downturn, spending on external services will continue to increase until the IT services industry becomes the largest overall sector of the IT marketplace by 2011.

Analyst Ben Pring said that services – including outsourcing and consulting – will reach “the commanding heights” of the IT industry. “You may change as a customer what you buy within the mix of the differing services that are available to you,” he said, “you may buy more application outsourcing in the downturn of the economic cycle... and less innovative consulting, but in total, and in aggregate, spending on all IT services is set to increase substantially. There is no sign that spending on external services will reverse in this period of the business cycle.”

However, the strategic decisions that businesses make about their sourcing strategies cannot themselves be outsourced, he advised. “Lawyers make a very good living sorting out that complexity. You must learn and must continue to improve your understanding of the techniques of multisourcing,” he said.

Top of the list of critical factors will be business primacy, said Gartner analyst Allie Young, referring to projects that enable business growth, linking IT more and more with business strategies. Attracting, developing and retaining IT personnel will be at the heart of this, she added.

This contradicted statements made at Monday's fringe event hosted by Getronics, which strongly suggested that CIOs often leave the enterprise once outsourcing partnerships become established.

The Getronics event – chaired by sourcingfocus.com's Chris Middleton – discussed the fact that once CIOs lose departmental staff they find themselves managing networks of suppliers rather than a coherent internal function – a role for which they are not necessarily qualified, and which challenges the fabled notion of the 'chief innovation officer'. As a result, many switch sides to the outsourcing provider. (See Editor's Blog).

Of course, the reality of outsourcing in a downturn is that 'cost takeout' is the primary aim of many projects, and not strategic enhancement of the business. This was acknowledged by Gartner's Young. All too often “cheaper dominates”, she said, followed by “better and faster”, and it is this that dictates the buying decision. However, she warned that it should not be a cost takeout that is crippling to the company when the economy rebounds.

“What organisations need is growth, speed and agility," Young continued. "Sourcing decisions must align to business goals. We individually have to take responsibility to break down that separation of business and IT. We all must become business leaders to think and connect business and IT in all we do."

On the topic of globalisation, Young said the challenge of establishing globally integrated IT and business processes was what “kept CEOs awake at night”. A lot of companies get stuck in the immediate benefits of labour arbitrage, she said. However, the smart buyers will begin to balance cost imperatives with other benefits.

Core to the future of sourcing strategies will be the internet, specifically the promise of technology virtualisation, remote management, software as a service (SaaS), VMware, alternative delivery models, and enterprise virtualisation.

“Visionary business leaders exploit moments of change to innovate,” said Gartner's Ben Pring, who went on to describe the “double-edged sword of legacy IT”. He said: "All of your business IP is invested in that technology; you've made big bets in the past, you've got skills based on that technology, and processes are invested in that too; but maintaining and enhancing that legacy footprint is expensive and getting more expensive, and the lack of flexibility means that changing things is difficult and too expensive.

“Legacy is not dead, the legacy is not turned off overnight, but simply is in terminal decline,” he said.

The gradual switch to net-native, web 2.0, and 'cloud computing' -based applications is inevitable, and will form a larger and larger proportion of your spending, and of the overall marketplace, he said.

“You need to understand that this is not a project... not like buying a new suit so you can look as though you are in fashionable times; it is not another upgrade, and if you treat it as such you will fail.”