Cloud Computing's Impact On Outsourcing Contracts

Although still in its earliest phases, the transition to cloud computing is having a measurable impact on IT services spending as outsourcing customers transition from IT spending on traditional IT delivery to cloud-based offerings. Additionally, the shift to cloud is altering supplier behaviors and is posing new challenges for both customers and suppliers alike in the transition from more traditional sourcing models. For example, the nature of outsourcing agreements themselves, which were essentially unchanged as recently as two years ago, have begun to evolve toward ever-lower customer commitments for resources — a trend that is at least in part due to the impact of cloud services. Outsourcing customers should take care to not encumber themselves unnecessarily in inflexible contract structures during the key transition period of the next five to seven years.