By Alex Blues, Head of IT Sourcing at PA Consulting Group

If you will forgive my leap onto the doom and gloom bandwagon, a recent Gartner report predicted that the IT services market will decrease by 1.7% in 2009, compared to a 6% increase in 2007. Furthermore, there will be no major recovery in IT spend until after 2012.

However, it should be remembered that behind those statistics, not every area will be affected equally severely – certain areas will suffer more or less than others. According to Gartner, consulting and systems integration will be hit hard, while process improvement, due to its nature of typically being driven by the business, won’t be.

And apparently, nor will outsourcing.

My concern though is that this apparent safety will result in outsourcing industry remaining complacent, as the step change in thinking, strategy and approach – which has often been called for but remains an accepted failing of outsourcing – will not be deemed necessary and therefore will not happen.

So, if Gartner is right, perhaps the recession will be good for the outsourcing industry as it will not be challenged. But for exactly this reason, the recession may actually harm outsourcing as the lack of challenge will allow a blind wandering through the slumped economy, without having to get fitter and leaner like the rest of the market.

I believe that the outsourcing industry needs this step change, and so two concepts urgently need to be adopted.

Firstly, ‘Outomation’ – the natural convergence of Outsourcing and Business Process Automation.

Many industries have already made the leap to automate, such as the automotive industry in the 1980s, and it is from here that we must learn our lessons. Outomation preaches, amongst other concepts, that development costs are shared with competitors, that shared and virtualised infrastructures are deployed and that the business becomes location independent. However, far from achieving this, outsourcing is still struggling just to move to the level where the emphasis is on growing and transforming the business, rather than just running it.

Secondly, there is an urgent need for suppliers to consolidate and collaborate so as to share the advances made for the benefit of their service offerings and the industry as a whole. In good times, this is unlikely to be even considered, but the deeper the recession and its impact, the quicker it will be forced to happen as we have recently seen in the financial services industry..

So, counter-intuitively, I hope the outsourcing industry will be affected by the recession. But just enough so as to have a significant impact on how services are delivered, to encourage suppliers to re-think their approach and to finally embrace the changes that other industries have made and seen succeed.