The notion of transformational outsourcing is marketed less today by vendors than a few years ago. We think there are several reasons for this. One of the main reasons is that most outsourcing contracts focus on cost savings - transformational outsourcing remains the exception, rather than the norm, in the market.
Nevertheless, transformational outsourcing represents a service offering for which a number of clients have the need, and it is here to stay. Transformational outsourcing makes sense to vendors: outsourcing contracts usually have a lower margin than project services. It offers the possibility of combining long term and recurring revenues with more profitable transformational work.
The importance of transformation in IT outsourcing (ITO) - i.e. infrastructure-led outsourcing and application management - differs greatly from other forms of outsourcing, such as BPO and network-led outsourcing.
