Outsourcing Emerging As Golden Opportunity For VARs

The predictions, published in "Predicts 2002: What's Ahead for Sourcing and IT Service," advises what savvy solution providers have practiced for years: offering services to accommodate customers' needs to outsource non-core competencies.

"The nature of business is long-term outsourcing," said Steve Ross, CEO of state and local government solution provider DynTek, Irvine, Calif., and a former executive at Toshiba, Inacom and IE. "The customer is looking for someone to provide an integrated, comprehensive suite of services."

The outsourcing trend is driven by enterprises and midsize business that realize they don't need or can't afford to own a specific piece of technology, said Lisa Stone, Gartner analyst and author of the report.

"Companies want to be technology users, not technology managers," said David Koretz, CEO of BlueTie, a Rochester, N.Y.-based provider of managed Web-enabled contact management solutions. "If you have someone who's spending all his time keeping e-mail up and running, then he's wasting his time because it's not his core competency. You have to help customers get rid of capital expenditure."

Stephen Monteros, general manager of GST, a systems builder and integrator in Cerritos, Calif., said he has seen an increase in outsourcing services from customers, especially school districts,a niche the company has developed over the years. Monteros said he has managed to keep tier-one manufacturers out of his accounts by becoming a virtual IT department and offering services whenever the school districts need them.

Selling the solutions, however, will become increasingly difficult, Gartner's Stone said. Solution providers must continue to present their customers solid return-on-investment reports and prove the solution improves functionality, cash flow, revenue streams and cost savings, she said.