Market Overview: Applications Outsourcing Suppliers Adjust To The "New Normal"

Suppliers of application development and maintenance (ADM) were whipsawed during 2009 by the impact of severe economic uncertainty and the subsequent partial recovery throughout the middle and latter parts of the year. Revenues are still down for many suppliers, in some cases substantially. However, supplier earnings have held up, and client demand appears to be rebounding. While no major suppliers suffered any significant impact due to economic conditions alone, they were obliged to take dramatic action to preserve their viability and profitability. Consequently, sourcing and vendor management professionals should verify that preferred vendors retain the strengths once ascribed to them. The market for ADM services continues to evolve with the higher premium placed on IP-based delivery and the impact of cloud services. The industrialization of ADM continues to progress but is limited by challenges in software measurement.