In a year when the IT industry suffered it’s first ever recession, Utility Computing is beginning to take shape as a major force of the next few years. Before the end of the decade, Gartner Group expects Utility Computing to be the most dominant form of outsourcing in the European market.

Driven in part by poor economic growth and high levels of uncertainty, companies are turning to outsourcing to control their costs and are pre-disposed towards signing long-term deals with “trusted” service-providers.

With the Western European outsourcing and IT services market worth an estimated $146 billion in 2001 (Gartner figures), this is big news for both the major technology companies and their customers. The implications are far-ranging: On an individual level IT departments will need to adopt new skill sets and strike a difficult balance between their traditional strength of technical knowledge and the increasingly vital one of relationship management. On a wider strategic front, many of the technology providers have to transform the pricing and delivery models that they have operated upon for the last decade.

The most telling assesment of companies readiness for the Utility Computing trend came from conversations with delegates at the Outsourcing conference: Regardless of whether they worked for a service provider or user-company, delegates fell largely into two separate camps: those who mis-interpreted the term as a reference to the power, water and gas industries – and those who not only understood it, but were excited by the potential utility computing offers.

Notable absentees from the conference sponsor line-up were IBM and, to an extent, HP (who chose to promote their outsourced printing service). This was surprising given both company’s emphasis upon the utility computing strategy – perhaps they felt they have promoted their commitment to the concept enough for now. If so, that is not a position that will remain tenable for long. Whilst some service providers are clearly at the early stages of organising for utility computing it’s equally obvious they have now begun to do so in earnest.