Savvis Inc., a subsidiary of
), recently released a study on IT Outsourcing and Cloud Computing.
The study was conducted through a survey that highlighted the
growing trend of corporate houses using outsourced IT
infrastructure rather than developing in-house IT infrastructural
According to the study, the enterprises believe that having an
in-house IT infrastructural facility incurs higher cost without
providing optimum utilization of resources.
In collaboration with Vanson Bourne international research firm,
Savvis conducted this survey among 550 enterprises across the U.S.,
the United Kingdom, Germany, Japan, Hong Kong and Singapore. The
survey offers an insight into nearly all aspects of a corporate
enterprise like finance, media, retail, software and automotive, IT
outsourcing, cloud computing and the costs of IT
The research highlighted that the organization would outsource
over 40% of its IT requirement within next five years compared to
the existing 25%. The report projects that currently 85% of the
organization are using public and private cloud for storage of
information as against only 39% in 2010.
However, the survey also shows that 56% of the global
participants have in-house IT facilities and the practice is more
prevalent in Japan. Almost 78% of the Japanese participants
admitted that they rely more on owned IT infrastructure.
Conversely, according to the survey, an increasing number of
businesses point out that owning an IT facility leads to wasteful
spending. In 2010, about 38% of the business houses held this view
which has now grown to approximately 60%; representing a potential
opportunity for outsourced IT infrastructural services. With the
acquisition of Savvis, we believe CenturyLink will be able to tap
these opportunities that would translate into future growth of the
The acquisition strengthens CenturyLink's footprint in the
hosting managed cloud services business including 51 data centers
in North America, Europe and Asia. The company continues to expand
data centers this year with a view to generating higher revenue
growth in collocation as well as managed hosting and cloud
These acquisitions bequeathed several additional benefits along
with greater scale and operational efficiencies, providing the
company with a competitive edge over rivals like
Leap Wireless International Inc.
We maintain our long-term Neutral recommendation on CenturyLink
Inc. The stock also has a Zacks #3 Rank, implying a short-term Hold
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