Magic Quadrant for Desktop Outsourcing Services, North America

Desktop managed services include the day-to-day responsibilities for operating and managing the desktop environment. The IT services include any combination of, or all of, the product procurement and support and professional services as they specifically relate to the ongoing operation and management of the desktop, including personnel resources, tools, assets and other associated requirements (see "Desktop Managed Services Outsourcing Definition Updated in 2010" [Note: This document has been archived; some of its content may not reflect current conditions.]). In addition, providers are offering a hosted virtual desktop service (HVDS) that provides application access from a centralized server, combined with a lower-cost desktop solution as the thin client.

Many of these providers included in this year's Magic Quadrant have broad coverage, experience and knowledge, while some concentrate on specific vertical markets. This has led to options in the market that can provide the best fit of methodologies, processes and services to meet the buyer's needs. In addition, our assessment will address the offerings in HVDS solutions, as well as other process and technology advancements.

The approaches to the market, levels of innovation, ability to execute and depth of services has led to a distribution of providers across the Niche Players, Leaders and Challengers quadrants. This diverse group of providers is good for the organization that is looking for a desktop outsourcing service provider, because it gives them a choice of providers that can offer the best and most cost-effective solution that meets their specific needs. Further detail on inclusion and exclusion criteria is provided in the Inclusion and Exclusion Criteria section of this research.

Source: Gartner (July 2012)

Vendor Strengths and Cautions

Atos

Atos Origin's acquisition (which closed in July 2011) of Siemens IT Solutions and Services (SIS) to become Atos provides a stronger position in Europe and an improved market presence in North America. However, this was not an acquisition to significantly broaden the vendor's footprint in North America, as both companies did not have a large market share there. The new Atos is supporting 400,000 desktops in North America, with 5% growth. Given the need to consolidate offerings and solutions, Atos will be a work in progress as it rationalizes its portfolio of products and toolsets and melds them together into a single effective capability.

Strengths

• Atos has a strong strategy centered on its Adaptive Workplace offering that addresses the client's needs with key service modules for device, application messaging and transformational services via its road map of service capabilities.
• Client references indicated that Atos is flexible in its approach and works to put client needs first.
• Client references stated that Atos employs good processes and has a continuous improvement approach to operations. This is bolstered by effective technical skills and real-time visibility, with insight from its dashboards.

Cautions

• Client references indicated that they were taking the lead on HVDS plans and implementation, with Atos providing support. This may be an indicator that the Atos HVDS offering is not marketed effectively and that clients do not see it as compelling enough, or that, at the account level, the message is getting lost.
• Gartner concerns stem from the Atos acquisition of Siemens in December 2010; clients should be aware that changes in the account support staff may occur. Know the Atos long-term strategy in desktop outsourcing and ensure that it meets your business requirements over the life of the engagement.
• Client references stated that the turnaround time for proposals is excessive; this could be an indicator that the new business development and approval process may not yet be fully engaged. Gartner recommends that the service provider proposal process be integrated into the project plan and, when possible, should include other service providers in the bidding process.

CGI

CGI's strategy to grow its U.S. business, including its desktop capabilities, has succeeded as the vendor now has 51% of its $4.1 billion in global revenue coming from U.S. business. To supplement its growth plans, CGI has made an offer to acquire Logica (with revenue of $6 billion) to strengthen its global footprint. CGI's strategy is to provide end-to-end services in focused sectors, including manufacturing, government and healthcare, retail and distribution, telecommunications and utilities, and financial services. CGI has invested in an HVDS offering that leverages a consulting approach that includes a business assessment and a technology assessment, followed by a technology trial, typically completed in a 90-day period. CGI's business is U.S.- and Canada-centric, so international needs may be a challenge for clients looking to expand globally, at least until the Logica acquisition is complete.

Strengths

• CGI has put into practice a consultative approach to HVDS that engages clients at the business level, to make sure the offering will service their needs.
• References stated that CGI demonstrates effective support of their desktop environments, with strong capabilities in the basic delivery of service reflective in consistently meeting SLAs.
• CGI has widespread and strong coverage in Canada, and continues to grow its presence in the U.S.

Cautions

• CGI's portfolio of new HVDS services in desktop outsourcing is driven by its consultative approach, so ensure that CGI's transitional resources are effective in delivery of the new service. Gartner recommends that the high-skilled resources be retained for the transition, as well as confirming that delivery dates and service performance are met.
• Client references indicated that CGI does not drive continuous improvement and that the customer typically initiates improvement initiatives. Gartner recommends that service levels and pricing be used to motivate CGI to be proactive with continuous improvement.
• While clients were very pleased with service quality overall, they pointed out that CGI was less effective in some areas of the U.S., where it may not have an effective presence. Gartner recommends that clients understand CGI's overall North American presence as they match their desktop service needs with the available CGI resources.

Ciber

Ciber has revenue of $1.1 billion from all IT services, with $56 million in North American desktop revenue. Ciber primarily builds, integrates and supports applications and infrastructures for business and government. With more than 8,500 employees in 90 offices in 19 countries. Ciber has added a new virtual desktop solution to include support and management; using the full suite of VMware solutions. Although Ciber has a global footprint, it works through alliances that allow it to service all geographical regions for its clients.

Strengths

• With a solid revenue base in desktop services, Ciber has continued to grow its North-America-based desktop services with a VMware-based HVDS solution.
• Client references praised Ciber for flexibility in its delivery, as well as being able to achieve significant savings over its prior delivery approach.
• Client references were impressed with Ciber's ability to deliver high customer satisfaction by meeting service levels and having effective service-level penalties.

Cautions

• Its new HVDS service may take time to build market penetration with clients. For clients considering Ciber as their service provider, Gartner recommends carefully studying the vendor's solution and seeking input from references regarding HVDS, with the goal of ensuring that Ciber can effectively deliver the service.
• References reported a reactive rather than a proactive approach, and this also was reflected in a weak continuous improvement program. Gartner recommends effective plans and incentives to ensure continuous improvement. This can come from price improvements over the life of the deal that will require Ciber to implement automation and effective service improvements to maintain margins.
• References indicated a lack of corporate attention to the needs of the account when any escalation by the local team was done. However, indications are that the local team performs well and is very effective.

CompuCom

CompuCom has $800 million in desktop service revenue, built from an array of services that include building on its HVDS offering, which accounts for 2.2% of the 3.4 million users supported. CompuCom has teamed up with 30 accounts to explore and expand its HVDS application and capabilities. CompuCom has a client satisfaction rate of 93%, with a 91% renewal rate. It is investing in HVDS, mobile device support, automation and remote management, with ongoing expansion globally to meet the client needs. CompuCom is also a part of the Global Workspace Alliance, led by Getroincs in Europe.

Strengths

• CompuCom relies on a well-trained, badged employee base to support its clients. It has also expanded its work-from-home program to meet the needs of clients and employees.
• Client references like CompuCom's partnership approach, which includes flexibility to change the contact as well as to deliver service quality to meet the needs of their clients' businesses first.
• Client references stated that CompuCom has high service quality stemming from effective process design and workflows.
• Its client reference list includes the top 10 largest Fortune 100 companies, with these large clients having relied on the vendor for an average of 14 years, many with engagements of 20 years.

Cautions

• CompuCom uses a consultative approach to end-user transformation, so make sure all costs and fees are known upfront as the plans for transition are documented.
• References indicated that the pricing proposals for new services can take a long time. Gartner recommends setting time frames within the project plan and requiring the service providers to adhere to the time frames for the added service component.
• References spoke of having effective service levels, but lacking a penalty structure. They were relying on the contract exit clause. Gartner recommends that the contract should have effective penalties tied to not meeting a single service level, to ensure that the service provider meets the delivery requirements for the business.

CSC

CSC has $16 billion in annual global revenue, with more than 1 million desktops supported. Its strategy and vision focus on how people work with its offering, centered on the Workplace services that address unified desktop services, mobility services and communications/collaboration services. To support this vision, CSC has, in part, invested in global tool standardization and integration. In addition, the vendor's investment in an HVDS and the resulting capabilities make it one of the Leaders in this space. CSC is well-balanced, with capabilities in each of the following verticals: manufacturing, chemical/resources, technology, financial services and public sector. CSC's effective growth in 2011 in its desktop service business further indicates market acceptance.

Strengths

• CSC delivers services with an end-to-end life cycle focus, and has driven continued growth based on aggressive investments in new tools and technologies (including cloud-based HVDS). This has positioned CSC as a Leader once again in the desktop service outsourcing market.
• The vendor can provide innovation with planned client innovation days and innovation boards to better align technology with its clients' business needs. This approach includes processes for continuous improvement and quarterly strategic IT alignment meetings with business.
• References stated that CSC has very good processes and that CSC helped them upgrade their use of ISO standards and ITIL capabilities, which has driven high customer satisfaction and consistent performance.

Cautions

• CSC has hired a new CEO with the intent to drive more effective financial performance. This typically results in changes to corporate leadership and account support. Clients should be aware of the potential for change and how it may impact the delivery of services.
• Client references indicated that CSC left them feeling as though they were one of many clients and were not getting the attention they required. Gartner recommends that clients should build a detailed relationship management plan into the contract structure that includes, at a minimum, formal communication and continuous improvement plans that incorporate regularly scheduled meetings to support day-to-day activities.
• Some client references said that CSC turnover with offshore resources has been a concern, and can lead to deterioration in service as new full-time equivalents (FTEs) are brought up to speed. Gartner has seen this problem with many providers, which now employ a bench of resources to allow the open positions to be filled with qualified and trained individuals. This can mitigate the risk of high turnover and long lead times to replace staff.

Dell

Dell has more than $8 billion in global service revenue and has experienced strong growth while aligning its delivery with business verticals to leverage industry knowledge for added business value for its clients. Dell has more than 2.5 million desktops under management, with the penetration rate of HVDS increasing as a total percentage of desktops supported. Dell's offerings range from a complete desktop-as-a-service solution to a build-your-own, custom virtual desktop approach with Dell's expertise and support.

Strengths

• Dell's vision has included global investments that have been substantial, including development in HVDS, which will expand rapidly in 2012, based on current deployments. Dell's investment in improving the customer experience should increase customer satisfaction rates across the board.
• The vendor has been very successful in its integration of Perot Systems and seems to have integrated the services of Perot effectively into its product offerings. This is also reflected in Dell's significant backlog of new business.
• Client references reported substantial savings from their prior service provider offerings in desktop support and were very happy with the value for their money. Noticeably improved processes with standardization and automation contributed to the savings performance.
• In addition, client references indicated that the Dell team was very responsive and had a complete understanding of the hardware and the related PC image.

Cautions

• Gartner's concerns include the current backlog of sales; this volume of new implementations may strain the existing implementation resources, thus clients should assess the skills of the Dell implementation teams very carefully.
• Some references indicated that Dell teams worked as delivery silos and did not leverage the desktop knowledge on the account when designing the help desk offering for it.
• Client references stated Dell was not a proactive innovator. Gartner recommends that the service contract should have effective governance to define the approach that will be used for continuous innovation, with reviews twice a year to include expertise from outside the account team sharing insight that leads to two innovative pursuits for the six-month period.
• Some references had concerns regarding a potential conflict with Dell's products and services division in meeting the ultimate needs of the client. Gartner recommends that organizations include clear SLAs and penalties to support the delivery, as well as predefined reporting to allow effective management of any engagement.

HCL Technologies

HCL Technologies' growth rate of 28% in the past year drove total global revenue to $3.9 billion. Its strategy and vision are to provide a best-in-class end-user computing service that creates business value for customers. The strategy is paying off in desktop support, with 17% growth, well above the industry. To accomplish this, the vendor is investing in the areas of cloud, HVDS and effective support of mobile devices.

Strengths

• HCL's investment in automation continues to improve its competitive position, as the vendor has reduced desk-side visits by 15% and now manages 80% of desktop calls remotely. The commitment to continuous improvement has delivered for HCL, with significant growth and customer satisfaction.
• HCL offers virtual desktops in three ways: hosted by HCL, hosted by the client and managed by HCL, and hosted and fully managed by HCL. This enables clients to choose how involved they want to be in their virtual desktop delivery solution.
• References indicated that HCL exhibits flexibility in delivery at a very effective price point, which produces high customer satisfaction scores.

Cautions

• Some clients reported that HCL's staff may be willing to take on more than they can handle. The lack of ability to say no or to push back on some work results in not meeting original deadlines, due to overwhelmed resources or the resources not having effective skills for the task. Gartner recommends integrating the service provider's workload into the demand management process to maintain a clear understanding of workload and resource effectiveness.
• Clients are concerned about turnover and the absence of effective skills in their vertical industries. They indicated a loss of business/account knowledge from the turnover. Gartner recommends that service levels and penalties be used to maintain effective turnover rates. This is more of an offshore issue, where turnover rates are much higher than in the U.S.
• References indicated that the tools available with the HCL service may be overstated in their effectiveness. Gartner recommends getting multiple references from other clients that have the tools in place and/or, at a minimum, engaging with effective trials and demos.

HP

HP envisions consumerization of the desktop with an exponential increase in information and an array of devices to access that information. HP has a well-defined vision to drive technology with virtualization, cloud services, and collaboration through a proven delivery that includes ITIL global delivery standards with HP's security and enterprise service network. The vendor's key delivery components will drive functionality for the 5.5-plus million desktops managed today.

Strengths

• HP's ability to leverage development over a large customer base allows for the planned investment to deliver its workplace vision. Integrating the capabilities of HP labs, HP hardware and software, and HP managed services provides the basis for innovation and knowledgeable resources to deliver for its clients.
• Client references felt the HP staff was an extension of their own staff and had the clients' interests in mind. The HP team was effective in driving efficiencies while meeting the contracted service levels.
• Additionally, references indicated that HP's managed services team would deliver effective pricing even when not bundled with HP hardware and software.

Cautions

• HP announced plans to reduce its total head count by 27,000 during the next three years through a combination of early retirements and workforce reduction. This is 8% of the HP workforce, with the initiative aimed at increased efficiencies and improved service. Gartner believes these plans will likely be influenced by a more selective approach as HP addresses the desktop outsourcing service market, particularly as it relates to labor-intensive field support coverage.
• Client references indicated that HP is big and, therefore, can be fragmented with its sales approach (for example, receiving calls from HP offering services that they already have contracted with HP).
• Client references indicated that HP's rates in long-term deals were typically reduced as a result of a benchmark and/or recompeting for or rebidding the contract. Clients are encouraged to ensure that HP's pricing remains market-competitive through periodic pricing validation efforts.
• A few clients indicated that the initial resources on their accounts had to be upgraded because they did not meet the skill levels required for their engagements. To avoid this, Gartner recommends that clients work to identify clear roles and responsibilities, and the corresponding required skills, to identify the right individuals to work on the account.

IBM

IBM continues to work a strategy that standardizes, automates and then globalizes its offerings, including the desktop support offerings. The vendor's desktop delivery plan includes reduced incidents with increased automation and user-guided resolution to increase end-user productivity. This strategy drove low-touch provisioning architecture in 2011, and will be followed by IBM Endpoint Manager and Smart Migration and Application Delivery in 2012. IBM is working to empower the desktop with a smarter, more connected workplace infrastructure to benefit the current client base, which includes over 2.6 million desktops managed in North America.

Strengths

• IBM's partnership with IT leaders is reflected in its strategy and vision that focus on the CIO's concern about the integration of the workplace, while providing additional flexibility for end users. This will drive IBM investments in virtualized desktop solutions, cloud-based solutions and tools to automate the deployment of end-user devices.
• Client references indicated that IBM is very good at driving standardization of hardware and processes — step one in the IBM strategy — and thus provides added value for the client.
• References also indicated that IBM's local team has very good engineering resources and they are very customer-focused and responsive to client requests.

Cautions

• References reported that, while IBM is standardizing, it is challenged with items that do not fit the model. This can result in added time invested to address IBM offerings, along with the need for additional communication requirements.
• Clients indicated concerns about pricing of the desktop services, and thus have indicated a higher propensity to rebid the work at the end of the contract.
• References indicated a challenge with the escalation process beyond the local team.

Maintech

Maintech offers desktop support, help desk and data center services. Its managed service business is a division of Volt, which has total revenue of $2.5 billion. Maintech primarily services the financial industry and is currently expanding its data center capabilities globally. The vendor supports 300,000 desktop users as a service offering for its data center clients. The resulting revenue from its desktop services qualified Maintech for participation in this Magic Quadrant. However, Maintech is a Niche Player, because it only participates in a help desk and desktop solution if it is part of a data center outsourcing engagement.

Strengths

• Maintech is potentially a suitable candidate for clients that fit its key delivery expertise. The vendor is successful in support of regional banks, brokerage houses and financial institutions. Maintech works well with clients' flexible schedules to deliver effective services. Its staff retention is such that clients know the break/fix technician personally.
• Maintech is known by its clients as a partner that works to get issues resolved and the work done. The responsiveness of qualified, skilled individuals allows the vendor to get problems fixed quickly. The Maintech staff knows the client environments, as technical staff is assigned for the long-term support of clients.
• Maintech recognizes that it meets the needs of the regional financial industry, while planning to expand globally. This focused strategy has led to high customer satisfaction, with a growth rate of 8% in desktop support services.

Cautions

• As Maintech executes a growth plan globally and grows its service desk business at a rate two times faster than the market, concerns surface around the vendor's ability to maintain a top-notch staff and continue to provide the flexible service that it has built its reputation on.
• Maintech is expanding globally, but would not be a fit for an expansive North American delivery capability and/or to meet an expansive global delivery requirement. The vendor is very effective with regional delivery, but prospects need to confirm coverage for all their locations.
• Reference clients indicated that Maintech needs to continue to develop infrastructure and offerings to keep abreast of its competitors' offerings.

Northrop Grumman

Northrop Grumman is a desktop outsourcing service provider with a strong focus on the government sector, including federal, state and local government. Northrop Grumman's customers have unique security requirements on a massive scale, and the vendor is very effective in this targeted vertical market.

Strengths

• Northrop Grumman focuses on effective service-level management, with an emphasis on overall account relationship management. This serves its government client base well.
• Clients have stated that Northrop Grumman maintains effective management tools and processes, and has ITIL V3 certification along with ISO 20000 ingrained in its approach and processes.

Cautions

• Clients indicated that Northrop Grumman's innovation was weak and needed improvement, and that it is not proactive in implementing change to the environment; however, with government clients, the ability to innovate may be deterred by the current systems supported. Gartner recommends that clients work with service providers to develop and document the processes for identifying technology and implementing innovative ideas.
• Clients stated that the Northrop Grumman root cause process and results could be improved. Gartner recommends that the root cause process be subject to service levels to drive consistency in the time it takes to deliver an effective reporting format.

Pomeroy

Pomeroy has $665 million in annual revenue and grew by 23% in 2011, with $62 million in desktop services that address all industries, and a majority of its clients are in the financial services and manufacturing industries. The vendor supports 825,000 desktop users with global capabilities. Offering solutions such as an HVDS and remote monitoring and management has provided its clients with an effective technology delivery option. Pomeroy's strategy includes optimizing the infrastructure with tenets that include process-led, relationship-based, technology-enabled, metric-driven and quality delivered. To support this strategy and vision, Pomeroy has gained ITIL certification, and has focused on continuous improvement and benchmarks to improve management, SLAs and price. Product improvements include HVDS, enterprise mobility, and remote monitoring and management.

Strengths

• Pomeroy continues to emphasize the importance of customer satisfaction with increased monitoring and managing of its client environments. This provides a client satisfaction rate to gauge improvement.
• With a multitier capability approach, Pomeroy has achieved a high renewal rate, exceeding 90%. Client references indicated that this is due to Pomeroy's laser focus on proactively solving end-user problems and meeting service levels with highly trained field support personnel, who have worked for the vendor for a long time. Relationship management personnel, with the authority to ensure customer satisfaction, also back up support personnel.
• References also pointed out that Pomeroy has a commitment to customer service and is focused on resource training. This is evident in its ability to deliver to the service levels.
• Client references indicated that Pomeroy is able to work well with C-level executives and provides flexible services when needed. They also stated that relationships were bolstered by very effective transitions with no problems.

Cautions

• References indicated that Pomeroy's processes in imaging desktop computers could improve. Clients seeking to use Pomeroy for significant PC deployment should review their approach which includes the use of Symantec Ghost Solution Suite for PC imaging, and ensure that the process and delivery approach is effective for their specific needs.
• Pomeroy's staff turnover is higher than most providers, at 10% (compared with 4% to 6%); this may result in service quality gaps as new employees are trained and introduced into the client environment. Gartner recommends that clients consider a service level to minimize account turnover and request a bench of pretrained resources if the turnover becomes a business inhibitor.
• Pomeroy's growth rate was flat from 2010 to 2011, while desktop outsourcing volumes increased by 10%. Increases in efficiency mean that the revenue directly attributed to desktop outsourcing was flat versus 2010. Gartner recommends that clients considering Pomeroy have a full understanding of the vendor's long-term service plan and how it will deliver for their business needs.

TCS

Tata Consultancy Services (TCS) is a global service provider with $1 billion in IT services revenue, managing 1 million end-user devices. The vendor's global business model has 50% of revenue generated in North America. TCS has experienced 25% growth in the past year for total IT services. Its strategy includes the expansion of its Global Network Delivery Model by exploring nearshore locations.

Strengths

• TCS stated that it supports a great deal of nontraditional equipment, including Apple devices. If a client has a need for Apple product support, then TCS should be considered as a provider.
• TCS employs a tiered level of support pricing that is straightforward and provides the client with options as to how desktop support will be managed and priced. The vendor has a current client satisfaction rate of 90% and a renewal rate of 100%.
• Client references stated that TCS is easy to work with, including offering flexibility in contract changes, and clients have found significant cost savings, compared with their prior service providers. The effective use of remote desktop support capabilities continues to drive costs down.

Cautions

• TCS is investing in new delivery centers in the U.S., Canada and Latin America to build its delivery talent pool, which is good news given its growth plans. However, this growth may stretch the vendor's current labor pool. Gartner recommends that contracts be specific as to who will be dedicated to the account and how the account will maintain effective skills.
• References have found issues with consistency as TCS delivered new desktops; it may not always follow the process. Gartner recommends that the engagement have a detailed roles and responsibility matrix, and that clients ensure that the service provider follows its quality methodology (in the case of TCS, the use of ITIL V3 and its Integrated Quality Management System).
• References indicated the need for TCS to be more innovative in its approach to helping end users be more productive. Gartner recommends scheduled innovation sessions twice a year, to include the IT organization, the business and the service provider, as part of the contracted delivery.

Unisys

Unisys is now a net cash entity with revenue of $4 billion annually ($1.62 billion from North America). The vendor continues to hammer on costs by implementing changes in its end-user service delivery model. Reducing the dispatch requirements and the associated costs has resulted in 29% efficiency gains, while improving client satisfaction.

Strengths

• The vendor's desktop offering is focused on delivering a personalized service to address the client's specific needs based on its user profile. This offering includes MyWork Services, which leverages a Unisys global platform.
• Client references noted Unisys was very flexible in handling short-term requests as well as in making service and personnel modifications.
• References stated that Unisys did a good job supporting the technology in support of the clients' policy of bring your own device. Effective support and good coverage in the U.S. and globally have driven improved customer satisfaction.

Cautions

• Unisys is standardizing its processes and methodologies; however, clients indicted they are experiencing some inconsistency in field support with the dispatch model. This may be brought on by the vendor's desire to be flexible with its offerings.
• Client references indicated that Unisys was not driving its HVDS approach; they had concerns as to how effective Unisys HVDS would be. This may be an indicator that its HVDS capabilities may not instill confidence in some clients at this time.
• Unisys plans to continue to drive out costs by using more low-cost labor, and has implemented programs to mitigate risk to deal with the challenges of increased employee turnover, which is typically triple the rate of onshore labor. Gartner recommends that clients understand the methods that service providers are using to mitigate the risk in turnover by setting appropriate SLAs to reduce turnover at the account level.

Wipro

Wipro is a desktop outsourcing service provider with capabilities that cross all industries.

Strengths

• Wipro continues to invest in improvement of tools, process improvement and methodologies.
• The vendor has developed effective deliveries based on industry verticals. Clients should review the Wipro capabilities that can uniquely support their industries.
• Clients have indicated that Wipro delivers effective services.

Cautions

• Gartner has not seen a significant change in how Wipro will address the U.S. market to deliver new growth.
• Clients have indicated that they are looking to improve pricing as they rebid their Wipro engagements.

Xerox

Xerox is participating in this Magic Quadrant once again this year, and it has made strides with the integration of Affiliated Computer Services (ACS) into Xerox. The acquisition means a broader capability for innovation as the full research resources become a part of how Xerox delivers technology effectively in its desktop services. The transition includes integration of business process, IT and document management. Xerox's approach to the desktop outsourcing service market includes growth, client intimacy, innovation in image engineering, automation, virtualization and Apple Mac services, along with global operational excellence.

Strengths

• The integrated strategy of the ACS services includes the Xerox research capability that can provide a powerful base on which to build innovative offerings for the North American desktop outsourcing service market. In addition, Xerox has a strong client base from its copier and print business in North America that can be leveraged to grow its desktop outsourcing service revenue.
• Xerox has worked with new clients to rebadge existing resources as well as to remain flexible in the tools used to manage the enterprise.
• Client references indicate Xerox is willing to take on a gain share approach with incentives for continuous improvement.
• Clients reported the effective use of service levels, with penalties to support the operations, coupled with consistent savings experienced with the Xerox desktop offering.

Cautions

• Although Xerox has stated that it has the resources of Xerox research behind its desktop outsourcing service offerings, client feedback is that it is not yet impacting accounts. This adoption will take time and will require the account management process to build a propensity to rely on an innovation approach in account support processes in order to take full advantage of this capability at the account level.
• Client references indicated that they want to see new approaches to service delivery and more-effective support tools. Gartner recommends having innovation built into the contract, with Xerox resources engaging the account on a regular basis to help drive innovation.
• Xerox indicated that the total uptake of HVDS overall is small, but reflective of the market. However, references indicated a large variation in the range of HVDS implementations that span up to as high as 20%. Gartner recommends that organizations work with Xerox on their plans for HVDS to integrate the latest Xerox solutions. Organizations must also complete their due diligence on the new offerings, which often carry development and implementation charges that must be recovered by the anticipated savings.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added

We added a vendor, TCS, to this Magic Quadrant. In addition, two companies changed their names with ACS, A Xerox Company, becoming Xerox (except in the Asia/Pacific market, where it retains the name ACS) and Siemens IT Solutions and Services was acquired by Atos.

Dropped

Two vendors were not included due to new revenue parameters: Stefanini (formally Stefanini TechTeam) and GlobalServe.

We required participating providers to have generated at least $50 million in desktop outsourcing service revenue. We also required a formal presentation from each actively participating external service provider, and asked that they provide a list of at least five North American client references. We used input from these client reference interviews along with information gathered from inquiry interactions with clients during the past 12 months, one-on-one meetings at Gartner events (such as Symposium and the Sourcing and Vendor Management Summit series), and other Gartner analysts' industry knowledge to determine the final assessment of each vendor.

Our methodology around reference checks and information gathered from the providers themselves was as follows.

Reference Check/Client Interaction Results

As part of the reference checks, we interviewed end users in 115 organizations, which had the following characteristics:

• Organizations ranged in size from slightly under 375 users to more than 200,000.
• About 85% of the organizations used the same provider for desktop and help desk support.
• A fairly significant number of reference clients indicated that they are either testing or have fully implemented the bring your own device (BYOD) to work service programs. This allows employees to use their own personal PCs and, in many cases, these are Apple devices.
• Many providers had indicated an increase in the support of Apple equipment (including iPads, iPhones and iMacs), otherwise known as "iSupport." This includes use of the genius bar.
• The iSupport is also included in the burgeoning mobile device support arena. We saw a substantial increase year over year, with all vendors reporting mobile support increases and new programs to meet the demand, as well as references indicating increased usage.
• Another area that is seeing modest increase is the hosted virtual desktop services (HVDS) support. Clients indicated an increase in virtual desktop penetration, particularly among their back-office users in finance, accounting, human resources and payroll as well as customer facing service desks and some sales and marketing users. The growth is still relatively slow but steady.
• Almost 60% of organizations received other services, besides desktop and help desk, from the same provider.
• The organizations represented every industry segment, including financial services, manufacturing, pharmaceuticals, government (including federal, state and local) and education.
• More than 98% of end users had formal SLAs.
• The number of service levels included in the SLAs ranged from as few as one to more than 30. In addition, over 90% of the deals measured fewer than five factors.
• More than 95% of the SLAs included penalties for underperformance, and almost 80% of the deals included earn-back opportunities, thus indicating that the industry has accepted such practices.
• About 25% of the SLAs had incentives for overperformance, a slight reduction from last year, indicating that organizations are carefully reviewing this part of the behavior drivers, with an eye toward paying incentives only when it is warranted by a business outcome and not as an equalizer for penalties.
• Innovation, while showing signs of an uptick in conformity by the service providers, remains a challenge that clients indicated is not being addressed sufficiently. Clients indicated that providers spend most of their time focusing on the service work in place and executing on that requirement, leaving innovative ideas out of the equation.

Relevant Data

In addition to the data gathered through reference calls, the desktop outsourcing service providers gave Gartner relevant market information regarding:

• Revenue: In total, the participating vendors reported that they have approximately 1,700 desktop service client organizations in North America, either as stand-alone or in conjunction with other services. The vendors reported the relevant desktop outsourcing service revenue in North America to be slightly more than $5.82 billion.
• Activity: The 1,700 client organizations outsourcing some form of their desktop support employed over 16.5 million personnel in the past year.
• Profit margins: Relevant to revenue, most provider organizations indicated gross profit margins of about 18% to 32%, with an average reported gross margin of 24%. Our analysis could not verify reported profit margins. Larger deals appeared to have smaller margins that are below the average, while smaller deals had slightly higher margins that are above the average. Of the nine key deal factors (see "Nine Factors That Drive IT Services and Outsourcing Contract Pricing"), the two most important pricing factors are deal scale and scope. Essentially, providers priced larger deals at a lower cost per transaction or per user per month, while they priced smaller deals at a higher cost per transaction or per user per month. Margins were higher in the very small proportion of desktop outsourcing service deals that used offshore resources.
• Pricing data: As with any IT infrastructure tower, the desktop has various pricing mechanisms. The mechanism reported by the client references that we spoke to included: per activity, per hour, per FTE and per user per month, with the most prevalent being per user per month for most of the activities, and then per user or per transaction for support items, such as installations, moves, adds and changes (IMACs). This has been the case for the past 10 years.
• Service provider employment: The 17 desktop outsourcing service providers have an average of 1,923 field staff personnel supporting client end-user locations across North America. In addition, most of the vendors use subcontractors for remote locations or locations where sufficient client employees do not exist to warrant an FTE assigned to that location. Service provider employee attrition was reported to range from less than 3% to more than 25%.
• Most-common service levels: Almost every reference that we spoke to had formal service levels they used to measure provider performance. The number of service levels per deal ranged from one measure of customer satisfaction to as many as 35. The most common service levels included:
  • Priority/severity Level 1 through priority/severity Level 4.
  • Availability of equipment — both desktop and LAN server — to the end-user community.
  • Customer satisfaction — the satisfaction that end users have, as it relates to the services performed.
  • A quality measure of the percentage of return visits related to the total visits for break/fix, IMAC and/or other on-site issues.
  • Measures related to the accuracy of assets in an asset database.
  • Measures related to the speed with which a provider resolves a security alert/intrusion in the security space.
  • The accuracy and timeliness of reports.
  • The time that it takes to identify and resolve problems related to continuous improvement activities.
  • Business outcomes continue to appear in a few more deals, including the number of "widgets" manufactured, number of manufacturing rejects, number of accounts payable claims processed per employee, number and accuracy of patient bills and accuracy of claims processed in the healthcare industry, timeliness and accuracy of reports in the financial services industry, and other business activity outcome measures.
• Penalties/incentives: Almost 60% of the deals that included penalties for provider nonperformance had penalty fee reductions, ranging from 10% to 20% of the monthly fee to the provider. A few deals included penalties in the form of adding back services, such as additional IMAC activities, at no charge, and break/fix activities at no charge, as well as additional hours of service at no charge when service-level failures took place in different pricing models. Along with penalties, many of the deals included earn-back opportunities — partial or full — of the penalty fee reductions (see "How to Structure Incentives and Penalties in Outsourcing Contracts").
• Benchmarking: Almost 65% of the deals included benchmarking clauses that enable the client to engage an external company to perform a formal price benchmark. The benchmark determines if the fees the client pays are within the top 10% to 25% of similar deal sizes and types in the desktop market. It is worth noting that reference checks this year resulted in feedback indicating that the providers were doing a better job, when compared with last year and previous years. Fewer references had challenges, and those that had positive comments were more complimentary than in past years.

Evaluation Criteria

Ability to Execute

We analyzed each provider's Ability to Execute according to the following criteria:

• Customer experience
• Sales execution/pricing
• Contract/deal structure
• Pricing acceptance
• Marketing execution
• Clarity of services, roles and responsibilities
• Client delivery model/relationship management
• Operations
• SLAs, metrics and measurement programs
• Expertise in technical support/operational/tool expertise
• Product/service
• Effective resourcing
• Transition management
• Market responsiveness and track record
• Client innovation
• Continuous improvement
• Overall viability (business unit, financial, strategy, organization)

The Ability to Execute axis positions each provider based on its success in delivering results today, as well as its preparation to deliver results in the future. On this axis, Gartner verifies a provider's capability to deliver desktop services based on direct feedback from extensive interviews with our clients and other provided references.

Gartner analysts evaluate providers on the quality and efficacy of the processes, systems, methods and procedures that enable their performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Ultimately, providers are judged on their capability to capitalize on their vision to achieve success.

We ranked each criterion as high, standard or low in importance, and scored each one accordingly.

Criteria Ranked as High

Customer Experience: We evaluated the relationships, products and services/programs that enable clients to be successful with the service solutions evaluated. Specifically, this includes how customers receive technical support or account support. This can also include the quality of ancillary tools and customer support programs, and the availability of user groups and SLAs.

Sales Execution/Pricing: We examined each provider's capability in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation. We evaluated the following areas:

• Contract/deal structure: We asked each provider to explain the management of various contracts, and how it had structured the relationship to meet the needs of both parties. This involved asking:
  • How do your deals support the service recipient's and the service provider's strategic goals?
  • Is there a shared vision?
  • Do you have a process to ensure that the visions remain aligned during the life of the contract?
  • From a contractual point of view, how can you provide flexibility and agility in the provisioning of desktop services?
• Pricing acceptance: We evaluated each provider's capability to manage prices and reduce costs (through new service offerings, improved productivity, management tools, quality, resource allocation or staff reductions). This information is key to outsourcing deals, in which the prime objective is gaining economies of scale. We also examined each provider's pricing schemes and clarity. This involved asking:
  • How are the various services priced?
  • Are there add-on costs?
  • Do you provide price justification to your customers based on business value?

Marketing Execution: We explored the clarity, quality, creativity and efficacy of programs designed to deliver each provider's message to influence the market, promote its brand and business, increase awareness of the service solutions, and create a positive association with the service solutions/brand and organization in the minds of buyers. A combination of publicity, promotions, thought leadership, word of mouth and sales activities can drive this mind share. We evaluated the following two primary areas:

• Clarity of services, roles and responsibilities: We explored each service provider's willingness to establish clear roles and responsibility matrices as part of a comprehensive governance effort. These matrices will avoid confusion among the parties, reduce duplication of roles, eliminate unclear responsibilities, and optimize decision making and project management processes. We also asked each provider to explain its relationship management role and how it supports what needs to be done for various service recipients. This involved asking:
  • What statement of work (SOW) structures describe the services offered?
  • Do you have a standard format? If so, what is included?
  • Is there a formal communication process to interact with the client?
• Client delivery model/relationship management: We examined each provider's delivery capabilities and practices for help desk services, CRM and knowledge transfer, as well as quality control and quality assurance. We evaluated service providers on their overall client delivery model and their ability to apply repeatable practices consistently to successfully manage long-term relationships with customers and support emerging business and IT challenges. We asked each provider to explain the organizational structure and procedures they use to manage their accounts and resolve differences, escalate problems, and generally maintain a successful relationship with their customers. This involved asking:
  • What is your style and approach to working in the client's cultural and political environment?
  • How would you describe the roles of relationship management, contract management and service delivery management in an engagement?

Operations: We examined each service provider's ability to meet its goals and commitments. Factors include the quality of the organizational structure, such as skills, experience, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. We evaluated two primary areas:

• SLAs, metrics and measurement programs: We evaluated how effective each provider's performance measurement program was to determine whether the provider was effectively delivering service. This involved asking:
  • How do you arrive at reasonable service levels for your service recipients?
  • Do you have penalties or incentives tied to SLAs?
  • Do you measure customer satisfaction? If so, how are the results of the survey used?
• Expertise in technical support/operations/tools: We evaluated the service provider's depth and breadth in help desk service technology areas. We looked at each service provider's skills and capabilities in help desk service environments and in the application of specific management tools, and the associated personnel expertise to satisfy the needs of each deal. This involved asking:
  • What are the principal standards, solutions and systems that your company can manage in help desk service engagements?
  • Exactly what help desk services do you provide?
  • Do you have specialized operational processes or tools for help desk service management?

Criteria Ranked as Standard

Product/Service: We looked at each service provider's core services that compete in or serve the defined market. The analysis included service capabilities, quality, feature sets and skills, whether the provider offers them natively or through agreements or partnerships with OEMs, according to the market definition and detailed in the subcriteria. We evaluated the following two areas:

• Effective resourcing: We focused on the service provider's ability to provide relevant resources effectively to the customer. This involved asking:
  • How do you decide on the resources required to support a customer?
  • Do you have tools and procedures to assist with resource allocation?
  • What are your current capabilities in terms of staff availability and facilities?
• Transition management: We evaluated the service provider's investments in its people, focusing on what practices it has put in place to recruit, train and retain qualified staff. We also judged providers on their ability to integrate staff from client organizations by offering competitive job opportunities (for example, addressing salary and benefit packages in different countries, retraining, career progression opportunities, and minimized disruption due to employee job location). This involved asking:
  • What are the key skill sets and competencies of the resources?
  • What changes in the skill set mix do you anticipate during the next two years?
  • Do you have a quality process and project plan for transitions?
  • What are your procedures for transitioning the workload to your facility?
  • How do you handle the hiring of your customers' employees?

Market Responsiveness and Track Record: We looked at each service provider's ability to respond, change direction, be flexible, improve continuously and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. We reviewed the following areas:

• Client innovation: This involved asking:
  • Assuming your company pays attention to emerging trends and developments in the help desk service market, how is that knowledge shared with your clients?
  • Do you provide advice and recommendations regarding innovations and tools to customers? If so, how do you present these?
  • How do both parties meet their strategic and operational goals, and respond to business and technology changes?
  • What examples of innovation and thought leadership have been brought to bear in client engagements?
  • What examples can you provide of investments your organization has made to stay ahead of the pack?
  As part of client innovation, we also reviewed continuous improvement, asking:
  • Do you use results from service levels to feed the continuous improvement process?
  • How do you measure customer satisfaction?
  • During the past 12 to 18 months, what innovations have you brought to market that have not been available previously?
• Continuous improvement: We evaluated each service provider's continuous improvement practices to ensure conformity with common, standardized toolsets, such as ITIL and Six Sigma, and best practices for continuous improvement processes. This involved asking:
  • Does the service provider supply continuous improvement and quality assurance processes?
  • Does it use these processes in the delivery of its services?
  • Do the processes work well and deliver the expected value?

Criterion Ranked as Low

Overall Viability (Business Unit, Financial, Strategy and Organization): This involved an assessment of the organization's overall financial health, the financial and practical success of the business unit, and the likelihood of the business unit to continue to invest in the service solution and advance a state-of-the-art service portfolio.

Source: Gartner (July 2012)

Completeness of Vision

We analyzed each provider's Completeness of Vision according to the following criteria:

• Offering (product) strategy
• Practice area
• Operational/tool expertise
• Business model
• Methodologies
• Management acumen
• Market understanding
• Innovation
• Geographic strategy
• Regional capabilities
• Alliances and partnerships
• Marketing strategy
• Sales strategy
• Vertical/industry strategy

The Completeness of Vision axis reflects each service provider's potential for success by analyzing its view of the market, service operating model, and strategic plans for growth and service improvements. Gartner verifies a service provider's vision regarding help desk services based on the provider's presentation, as well as direct feedback from extensive interviews with the provider's clients.

We asked each service provider many questions and evaluated each on its ability to articulate logical statements convincingly about market directions, innovations, customer needs and competitive forces. Ultimately, we rate providers on their understanding of how they can exploit market forces to create opportunities for themselves.

We ranked each criterion as high, standard or low and scored each one accordingly.

Criteria Ranked as High

Offering (Product) Strategy: We asked each provider to describe its product solution strategy relative to future market needs. We reviewed the following areas:

• Practice area: We evaluated the composition of practice areas serving clients that require help desk services, including relative size, revenue, number of seats supported, geographic reach, leadership of the management team and the team's position in the corporate structure.
• Operational/tool expertise: We looked at whether providers used specialized operational processes or tools and if they used an ITIL or other process to manage their workload. This involved asking:
  • Do you have specialized, operational processes/tools?
  • Are you using ITIL or another process to manage your workload?
  • What operational tool expertise do you offer customers?

Business Model: We evaluated two factors:

• Methodologies: We asked each provider for a high-level description of its desktop service delivery business model. In addition, we reviewed the procedures (operational, transitional, program management, relationship management and change management) that each provider offers to customers. We focused on the processes and best practices that the provider implements for a smooth transition of systems, people and assets. This involved asking:
  • Is the model embedded in a larger methodology?
  • How does this methodology link technology implementation to business objectives?
  • How do you ensure that the sourcing management processes are appropriate and effective for your various clients?
  • How do you ensure that help desk services can deliver high-value services by supporting applications and business processes?
  • Are processes to measure bottom-line business results (or value delivered via an optimized and agile IT infrastructure) embedded in the methodology? If so, what are the key features for measuring results?
  • What practices does your organization use to ensure and control quality?
• Management acumen: We evaluated the management structure that each provider uses to support and manage customers, as well as the experience of its managers, because these factors are directly associated with the success of a provider. Having good plans and the people to carry them out are essential. Deals are good for both parties when account managers focus on ensuring that deals meet their clients' needs and on satisfying the provider's profit targets. Therefore, our evaluation involved asking:
  • What is management's experience and skill levels?
  • How are customer issues addressed?
  • What is the level of experience of executive management and the assigned key customer-facing managers, and what are their skill levels?
  • How are customer issues addressed?
  • Does the customer have access to the appropriate level of management in the providers?

Criteria Ranked as Standard

Market Understanding: We asked each provider to describe its strategic plan and vision as it relates to desktop services, as well as its commitment to aligning services with future market needs. We also evaluated providers on their capability to demonstrate a well-defined, articulated vision to assist clients in linking desktop services with enterprise technology and business strategies. This involved asking:

• How would you differentiate your strategic plan and vision from that of your competitors?
• What is your company's heritage in this area?
• How long have help desk services been part of your service portfolio?
• How have they evolved and grown?
• How will you maintain a leading position in a challenging market?

Innovation: We evaluated each service provider's position in the market as a thought leader and innovator. We assessed each service provider's leadership and supporting investment to develop innovative strategies in the help desk service market. This involved asking:

• How does your company stay current with new technology and tools?
• Do you have alliances with other suppliers?
• Do you offer innovative services to your customers (for example, adaptability and agility of the services, quality of the services, and ability in managing a long-term relationship)?
• How do you offer innovations to your customers?
• What investments are being made by your company to sustain and enhance its vision for innovative help desk services?

Criteria Ranked as Low

Geographic Strategy: We reviewed the following areas:

• Regional capabilities: We evaluated each service provider's strategy to direct resources, skills and offerings to meet the specific needs of regions outside its home or native geography (directly or through partners, channels and subsidiaries) as appropriate for that geography and market.
• Alliances and partnerships: We evaluated each service provider's relationships with product providers or other service providers to add value, provide full-service solutions or bring innovation closer to their clients. In particular, we looked at providers' capabilities to demonstrate that they had selected strategic relationships that are well-defined and can successfully and seamlessly link into many client environments.

Marketing Strategy: We evaluated each provider's strategy and approach to the market and how it promotes help desk services. We asked each provider to supply a high-level sales organization chart to demonstrate its go-to-market strategy and assessed each provider's capability to articulate its value proposition and differentiate its services. We also evaluated providers' penetration of industries and their capability to leverage vertical expertise in their sector and other sectors. We looked at their capability to demonstrate expertise in vertical markets and business processes, which are underpinned by desktop services. This involved asking:

• How many dedicated personnel do you have?
• How does your company measure the effectiveness of the business development model?
• What training do marketing people receive?

Sales Strategy: We evaluated each provider's sales strategy and capability to sell desktop services. This involved asking:

• How many dedicated personnel do you have?
• How does your company measure the effectiveness of the sales organization?
• What training do salespeople receive?
• What is your sales strategy for desktop services?
• Do you have standard sales processes, and do you use sales productivity tools?
• How do you respond to requests for proposals?

Vertical/Industry Strategy: We evaluated each provider's strategy to direct resources, and the skills and offerings it has to meet the specific needs of individual market segments, including vertical industries. We assessed the extent to which providers have penetrated industries and their capabilities to leverage vertical expertise in their sectors and other sectors. We also evaluated their ability to demonstrate expertise in vertical markets and business processes, which are underpinned by desktop services.

Source: Gartner (July 2012)

Quadrant Descriptions

Leaders

Leaders deliver their service solutions skillfully, have a clear vision of the direction of the services market, and are actively building and improving their competencies to sustain their leadership positions. The Leaders quadrant indicates the maturing desktop outsourcing service market. However, the continuing changes in the delivery model capabilities will continue to drive continued change in the market. The following eight service providers (listed in alphabetical order) emerged as Leaders in this Magic Quadrant:

• Atos
• CompuCom
• CSC
• Dell
• HCL Technologies
• HP
• IBM
• Xerox

Leaders have demonstrated their many years of experience in delivering desktop managed services, and understand the requirements to successfully deliver these services. They have proven their Ability to Execute their strategic visions. This was particularly evident during the reference-checking portion of the analysis.

Challengers

Challengers execute well, but they have less defined views of the market's direction. Some, as indicated by their relative closeness to the Leaders quadrant, are poised to join the Leaders, while others may not (yet) be preparing aggressively enough for the future. The following four providers (listed in alphabetical order) emerged as Challengers in this Magic Quadrant:

• CGI
• Ciber
• Pomeroy
• Unisys

Challengers have demonstrated that they have solid bases of desktop outsourcing clients, which are satisfied with the providers' services. The closeness of many of the Challengers to the Leaders quadrant indicates their maturing and improving capabilities. They have the potential to move to the Leaders quadrant if they can moderately advance their strategic visions, and solidify and expand their service offerings.

Visionaries

Visionaries have a clear vision of the market's direction and are focused on preparing for that, but they can improve their service delivery. After careful consideration, no vendors qualified for inclusion in the Visionaries quadrant. This indicates that the market is mature and that most vendors have operated in it for enough time to have more than just a vision of what they want and what they can do in the market.

Niche Players

Niche Players focus on a particular segment of the client base, as defined by characteristics such as size, vertical focus and selective desktop service offerings. This narrow focus may affect a Niche Player's capability to outperform or innovate. The following vendors qualified for inclusion in the Niche Players category:

• Maintech
• Northrop Grumman
• TCS
• Wipro

This Magic Quadrant for Desktop Outsourcing Services, North America is a useful starting point for identifying and evaluating desktop outsourcing external service providers. The providers identified in this Magic Quadrant can provide desktop managed services. Each has its own processes, methodologies, toolsets and capabilities. Each organization, therefore, should base its selection on a detailed evaluation of its outsourcing objectives, its business and technical requirements, its cultural nature, and the provider's capability to fulfill those expectations.

Gartner's rigorous and multidimensional Magic Quadrant research process includes evaluation criteria that provide a comprehensive framework that we have used to analyze the ability of 16 providers to deliver desktop outsourcing services in North America. A key aspect of our Magic Quadrant research involves interviewing client references provided by service providers. This process identified four trends across all providers:

• Although client references indicated that innovative processes had improved since the last desktop outsourcing service Magic Quadrant, clients stated that their service providers still fall short of doing enough proactive work in this area. For this reason, Gartner recommends that organizations address innovation through contracts and service levels, with incentives and penalties for innovation-based activities.
• When most service providers implement new or upgraded service solutions, they don't automatically upgrade their solutions for established clients.
• Some, but not all, providers are developing approaches to retrofit their solutions for all clients. Gartner recommends that organizations ensure (through their contract structures) that they have the option to take advantage of any of their service providers' solution improvements. This can be a major undertaking, and many service providers are prudent not to disrupt environments every time they change something in their processes.
• The implementation of tools, such as remote infrastructure management tools and knowledge database tools, led to fewer deskside visits, and, therefore, continue to help reduce or contain the cost of desktop managed services.

Gartner's "Forecast Analysis: IT Outsourcing, Worldwide, 2011-2017, 2Q12 Update" indicates that the mature desktop outsourcing service market in North America was worth $9,371 million in 2012 and will grow to $10,640.2 million in 2017, with a compounded annual growth rate of 2.8%.

This desktop outsourcing service market is complex because of buyers' varying needs, the growing intricacy and requirements of multinational businesses operating in North America, and the ongoing technological advances that add to and change the delivery capabilities of providers. Also adding to this complexity is the new and ever more complex global economy, the number of global delivery opportunities from low-cost countries, the increasing maturity of technology, and disruptive trends, such as the industrialization of IT services and cloud computing.

Desktop outsourcing service capabilities vary among providers in a market that is undergoing transformation due to several trends that client organizations and providers are focusing on. In particular, clients are focusing on the following three trends:

• Increased virtualization: Organizations have renewed their interest in HVDS (see "MarketScope for Hosted Virtual Desktop Services" [Note: This document has been archived; some of its content may not reflect current conditions.]) as an alternative solution for large functional areas of their desktop environments. In particular this year, reference clients indicated a strong interest in the HVDS services that providers have available, and providers have responded with solutions that meet clients' needs; however, it remains a challenge to transition to a HVDS solution at a cost that is acceptable to the buyer.
• Remote infrastructure management: Providers are increasingly using remote infrastructure support solutions as part of their desktop offerings to help reduce the time it takes to resolve problems, increase the confidence of the desktop support managed service providers and continually reduce the number of on-site visits. In turn, this further reduces the costs to support the organization's desktop environment.
• Further standardization: We continue to see organizations that require their providers to focus on service management and continuous improvement to transform the help desk into a single point of contact, to more effectively manage customer/user relationships and to improve the quality of desktop support. (Note: We have seen a leveling off of, if not a decrease in, the use of ITIL as a standard tool, and, from a client perspective, it is now less of a concern than it was when ITIL was introduced as part of desktop and other infrastructure solutions. This does not mean that ITIL is not being used; it is simply an indicator that ITIL is less relevant to the buying centers).

When developing desktop outsourcing offerings, service providers are focusing on the following six trends:

• Mobile computing: Clients and providers alike indicated that the use of mobile devices, iPhones, iPads and similar devices has increased significantly, and the Magic Quadrant interviews indicated that this is a priority for many clients.
• Increased automation: Providers continue to invest in automating their back-end infrastructure to provide various options for diagnostic and data backup and restore functions. In addition, the automation of resource provisioning and image preparation has been a focus for improving process efficiency.
• HVDS: Service providers continue to offer their new versions of HVDS. This service has grown in the market, but at a slower rate than expected. Gartner sees barriers (primarily in the business case) when replacement of assets is not warranted at the particular time, thus postponing the decision to go with HVDS.
• More technologically savvy end users: End users are more sophisticated in their use of IT than ever before. Generation Y, with its continued and increasing use of social networking technologies outside business hours, also continues to combine personal and business IT usage. As a result, Generation Y continues to demand more-efficient desktops and devices that they can control. These users are often called digital natives. Evidence supports this with increased demand with Apple products and services, as well as more clients implementing a BYOD approach.
• Further consumerization: Consumerization continues to grow at an ever increasing pace, with Generation Y leading the way and many members of Generation X, as well as baby boomers, also utilizing consumerized solutions, both in and out of work.
• Value-added service bundling to avoid further commoditization: Providers are looking for new ways to differentiate the technology they use in their desktop outsourcing offerings. For example, some providers are looking to drive innovation and document the cost savings to client organizations. This is a direct opportunity to offset the cost of the outsourcing service and increases the value of the service providers' partnership.