U.S. financial service providers (FSPs) are expected to spend $65.7 million on IT services in 2005. However less than 30% will outsource any strategic projects by the end of 2006, according to Gartner Inc., Stamford, Conn."Most FSPs currently use outsourcing tactically to augment staff for faster project turnaround or to reduce operational costs, rather than for strategic value," says Kimberly Harris-Ferrante, research vice president at Gartner. "FSPs should now begin outsourcing strategic projects in order to gain larger-scale, enterprisewide value."

"Strategic projects have different dimensions than normal, tactical projects," Harris-Ferrante says. "They are more complex in that they focus on blending the use of IT outsourcing and business process outsourcing to enhance and transform the organization. The nature of the project requires a different structure of contracts, relationship model and metrics."

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