18 July 2010 | Lindsay Clark

Growth in demand for business process and IT outsourcing has slowed in the past quarter, according to research from consultants EquaTerra.

Sixty-two per cent of global service providers cited growth in prospective deals, reflecting a drop of 9 per cent from the first quarter this year and 3 per cent year-over-year, the research firm said.

“Organisations were expected to emerge from a long period of retrenchment in the first quarter of this year with a laundry list of things they wanted to outsource,” said Stan Lepeak, managing director of global research for EquaTerra. “While there is significant interest in conventional outsourcing, a growing number of buyers are also exploring options like virtual IT infrastructure and software as a service.”

Although interest in conventional outsourcing has been sluggish, EquaTerra expects the prolonged recession to speed up the adoption of cloud services, where business applications can be hosted on remote servers and accessed via the internet. This can offer buyers a way to increase capacity and capabilities without large up-front investments in infrastructure, software or complex implementation efforts.

EquaTerra found 53 per cent of service providers reported software-as-a-service deals, such those offered by salesforce.com, were already under way.