Outsourcing activity is expected to creep back in 2011, but things are hardly getting back to normal in the IT services space. The new year will be marked largely by upheaval - smaller contracts, cloud-related chaos, increased offshoring and decreased quality, for a start.

Read on for more. It’s not all bad, we promise.

1. Progressive Outsourcing

The year will be marked by the inking of smaller IT services deals, many of them by first-time buyers who sat on the sidelines in 2010, say industry watchers. Providers, happy to have a foothold, will push such customers to expand the scope of their relationships over time — the old “penetrate and radiate” approach. Contract activity will “creep back throughout 2011, as the recover stutters and buyers pull the trigger on sourcing activity,” says Phil Fersht, founder of outsourcing analyst firm HfS Research.

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