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New Delhi , Jan. 6

THE demand for outsourcing software-related work is expected to remain strong with clients continuing to outsource applications maintenance and custom application development, and undertaking several consulting projects over the next 12 months, a report by Forrester Research that surveyed decision-makers at North American firms has said.

"Forrester found that 58 per cent of all respondents currently outsource some software-related services. When we asked respondents about their plans for the next 12 months, we found that maintenance and custom development tops the list for outsourced work," according to the Forrester report titled `Firms' software outsourcing plans for 2006'.

As much as 42 per cent of the firms outsource maintenance of packaged applications, and another seven per cent plan to do so in the next 12 months, it said, adding that while eight per cent of respondents plan to outsource custom application development, 39 per cent already do.

The document analyses North American data from a Forrester survey fielded in November 2005 of 911 North American and European software and services decision-makers to track the adoption trends in software technology and services.

The report further said that custom development also figured in the list of project work. "When respondents were asked about which projects they would hire consultants or integrators for (not ongoing outsourcing contracts), custom application development topped the list, with 42 per cent of respondents selecting it. Another 35 per cent will get help for security assessments and 32 per cent will hire consultants for business process change engagements," the report said.

Of the firms that outsource custom application development, about 81 per cent reported that they use the outsourcer to add new functionality to existing applications. More than three-quarters were building new applications to support new business initiatives.

Steady offshore interest: The report found that the interest in offshore held steady. "Slightly more than one-third of respondents reported using or considering using offshore resources. Sixty-one per cent of firms reported that they had no plans to go offshore, and only 2 per cent reported that they were using offshore resources but would decrease their use," it pointed out.

The report concluded that applications outsourcing would help make 2006 a good year for service providers.

"As demand for applications outsourcing and other software-related services continues to hold, expect service providers to expand their applications outsourcing offers to include more custom applications. Outsourcers such as Computer Sciences Corporation and IBM offer outsourcing for any kind of application, but look for integrators that traditionally only outsourced ERP applications or applications that they built themselves to expand into custom applications," Forrester said.

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