Retailers Look To Outsourcing To Cut Costs

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Shops are getting smarter about using outsourcing, says Datamonitor

The global recession is leading companies to investigate new ways to cut costs and improve the sustainability of their IT systems – including the retail sector, which is increasingly looking to outsource technology and business processes, according to research.

In a report released this week, Retailing in a Recession: The Opportunities for Outsourcing, analyst Datamonitor outlines its take on how retailers are not only trying to cut the cost of running their IT operations but also use technology to trim fat from other parts of their business.

“To survive or succeed in the downturn, retailers will be looking for efficient ways to generate revenue by managing the demands of the customer, while at the same time making cost savings across the organisation”, said Christine Bardwell, retail technology analyst with Datamonitor and the report’s author. “Many are looking to technology and services to help cut the cost of managing inventory, non-critical business processes and store operations”

Bardwell added that although retailers are outsourcing in the recession, the types of contracts have changed.”Large scale infrastructure overhauls are less common. Instead retailers are requesting a mixture of services on lower value contracts, or transformational deals over longer periods of time.”

The report also examines the key IT outsources and business process outsourcing (BPO) to the retail sector. “IBM is the top outsourced service provider to retail, with 14 percent market share but the report says this could be set to change as competition in the space heats up,” the report states.