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Tech Spending Under Pressure, But IT Services Seen Growing
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| Written by Mel Duvall |
A survey released this week by Forrester Research confirmed what most in the industry have suspected: IT budgets are being cut in the face of a global economic slowdown.
In a survey of 950 large organizations in North America and Europe, Forrester found that 43% of companies have already trimmed their overall IT budgets in reaction to the downturn in the global economy. In North America, which felt the downturn before Europe, the effect has been more severe with 49% saying IT budgets had been cut.
As is often the case, however, the Forrester survey found that not all areas of technology spending are being impacted to the same degree. Demand for IT services in particular remains strong, or at least steady.
Forrester found that 45% of firms plan to increase their use of applications outsourcing, while 43% of firms are increasing their use of infrastructure outsourcing. Furthermore, 43% of respondents said they are moving more work offshore. In the infrastructure outsourcing arena, telecommunications and network management appears to be a hot commodity, with 20% of firms saying they will outsource this service in 2008.
The findings aren’t all good news for the IT Services industry. When asked how the economy will affect IT services spending, 70% of respondents said they will likely negotiate lower rates with suppliers and 16% said they have already cut their IT services spending.
And here’s one other bit of bad news: Satisfaction with outsourcing and IT services remains low. Forrester says 52% of those surveyed say their biggest challenge with existing IT services and outsourcing relationships is that cost savings are lower than expected. IT managers also pointed to challenges with inconsistent or poor service quality (40%) and the inability of the vendor or contract structure to respond rapidly to changing business needs (35%).
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