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Outsource this: how businesses are handing over cloud management to others

Although many companies froze their outsourcing efforts at the start of the pandemic, others are now planning to use outsourcing services for the first time in 2021.

Enterprises are increasingly turning to cloud outsourcing providers to manage their private and hybrid cloud infrastructure as they face progressively complex IT environments, according to new research by global technology research and advisory firm ISG. 

Indeed, although many companies froze their outsourcing efforts at the start of the pandemic, others are now planning to use outsourcing services for the first time in 2021, a new report by ISG has suggested.  

Broadly, the research found that many enterprises are currently focused on leveraging provider capabilities to control the cost of managing their private and hybrid clouds. 

“Enterprises worldwide have realised that outsourcing their cloud infrastructure management is a great way to realign their IT systems with business objectives in the most cost-effective manner,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. 

ISG claimed to be seeing steady global growth in the hyperconverged infrastructure (HCI) market, as enterprises use HCI for its high reliability, capacity and scalability, as well as for its simplified monitoring and management capabilities.  

HCI also allows for better disaster recovery and offers independent compute capabilities, ISG noted.  

Moreover, the cloud management platform (CMP) market has changed significantly in recent years, the research and advisory firm said, claiming that many of the management tasks formerly performed through a CMP can now be done easily with an individual cloud provider’s console. 

As such, the CMP, which was previously considered an essential feature, has now become a commodity, and hybrid cloud management vendors are expanding their features to offer the broadest range of tools to users. 

According to ISG, global interest in outsourcing has been growing amid the COVID-19 pandemic, with recent figures suggesting that spending on infrastructure-as-a-service (IaaS) climbed to a record US$8.2 billion in the second quarter of 2021, up 41 percent year-over-year and 15 percent quarter-over-quarter. 

Overall, global demand for IT and business services, at US$19.1 billion in the three months ending 30 June, reached a new record for the third straight quarter, as enterprises accelerate their digital transformations and move to the cloud. 

Perhaps this should come as little surprise. The report pointed out that outsourcing cloud management offers several other benefits to organisations beyond cost containment; it gives companies access to specific IT skills they may not have, and it allows them to share resources such as engineers and security services at cloud facilities. 

In early July, fellow industry analyst firm IDC suggested that spending on certain products in the global cloud infrastructure market increased by 12.5 per cent, year-on-year, during the first quarter of 2021, with the market shifting towards shared cloud infrastructure all but guaranteed.  

According to a report by the research firm, spending on shared cloud infrastructure rose by 11.6 per cent year-on-year during Q1, to US$10.3 billion. Meanwhile, non-cloud infrastructure spending rose by just 6.3 per cent to US$ 13.5 billion.  

As a result, IDC said it expected shared cloud infrastructure spending to surpass non-cloud infrastructure spending “in the near future”.  

Meanwhile, spending on dedicated cloud infrastructure rose by 14.7 per cent during the quarter, to US$4.8 billion, with 45.5 per cent of this deployed on customer premises.