Report Touts Outsourcing Gains
Jupiter: In-house web hosting will be rare within three years

August 16, 2001 -- In-house web hosting will become "rare" within three years as companies become more aware of the savings available from outsourcing these functions, according to a new report from the consulting firm Jupiter Media Matrix.
According to Jupiter, 34 percent of companies currently host web servers in-house, and another 24 percent split their web operations, handling some functions in-house while outsourcing others.
Jupiter says these companies may be missing out on savings that could reach $6 million or more over a three-year period.
"Companies that continue to host their own sites will gain little competitive advantage and spend more money on staffing and technology than those that outsource these functions,'' said David Taylor, research director, Jupiter Media Matrix.
"There is 30 to 40 percent cost savings to be realized by outsourcing hosting - and too many companies are overlooking this," Taylor added. "Those that act and act now will be saving millions in the long run.''
Jupiter's findings will be music to the ears of providers of managed web hosting services, who are pitching corporations on the benefits of outsourcing. Many colocation providers are busy adding managed services offerings (such as storage and Internet security) in an effort to more effectively court these enterprise customers.
According to Jupiter, companies that have thus far been reluctant to trust their web hosting to outside firms are beginning to get more comfortable with the idea.
"Because perceptions that drive companies to host applications internally will recede and the advantages of outsourcing to a specialist will be more apparent, in-house hosting will become rare within three years," according to Jupiter's analysis.
Additional findings from Jupiter's research will presented at a conference the company is hosting in San Francisco next month
Jupiter Media Metrix provides Internet and new technology analysis and measurement.