When people look back at 2003, some might see it as the beginning of an economic recovery that sparked renewed growth in the IT and telecom industries. However, there are numerous indicators that these industries are not only experiencing renewed life, but are fundamentally recreating themselves. It is very likely that 2003 will be seen as an inversion point in which the IT and telecom industries began a broad-based shift from technology-driven to services-led businesses.

This movement toward service-centric business models poses new challenges and offers new opportunities for those who grasp them. This industry inversion will require IT and telecom professionals to swap old technical skills for new business proficiencies. It also will force IT organizations, technology suppliers and telecom carriers to redefine how they deliver value to their end users and customers, respectively.

On the enterprise side, IT organizations must prepare for the inversion process by looking at themselves as internal service providers rather than insulated cost centers, in order to respond to budgetary constraints and rising end-user discontent. They must learn how to package, price and promote their IT competencies in corporate business terms, or they will become victims of an expanding array of outsourcing alternatives that could land them on the unemployment line.

Offshore and domestic IT and business process outsourcing (BPO) has become the rule for a growing number of companies. AMR Research estimates that 70% of energy companies will have outsourced all or part of their application development and application management in 2003, and utility companies are increasingly contracting for BPO services to cover their back-office operations.

Meta Group predicts that nearly every corporation will outsource some aspect of its IT operations by 2006 and on-demand computing will become the dominant outsourcing model by 2007. Gartner expects less than 10% of companies will have the appropriate business processes and governance structures in place by 2005 to effectively manage their outsourcers and other external service providers. Therefore, companies must develop better vendor relationship-management skills and procedures to get the most out of outsourcing arrangements.