Information executives plan to significantly reduce the number of contractors they employ, as well as of staff in professional services and hardware, and invest next to nothing in cloud computing, which is in line with the efforts to economize measures over investments in new technologies.
"In a cost-restrained IT budget scenario, CIOs will most likely look to cut their resources first from lower-value augmented [contract] IT staff," states the report, which Goldman Sachs describes as an “early warning flag” for services providers’ bookings of new projects in 2009.
The survey suggests that cost cutting will be felt the most in basic PC and network hardware and professional services providers. 47 percent of the managers said that spending would slow down the most in the area of purchases of personal computer systems, servers and storage. 42 percent said that they are "reluctant to spend money on third-party professional services."
The Goldman Sachs report also says that the “demand for discretionary IT projects dropped to its lowest point” in the history of the staffing survey.
The most significant change since October, however, relates to in-house staff. Last year, when asked which area of IT service delivery resources they would be willing to cut for application-related development or maintenance work, none of the respondents said that they would cut any of the in-house IT staff. In February, the number rose to eight percent and then to 15 percent in April. In the most recent survey (June), 11 percent of the managers said that they would cut in-house staff.
The survey shows where CIOs’ priority currently lie: in the areas of server virtualization and server consolidation, followed by cost cutting, application integration and data centre consolidation. Cloud computing is the last on the list.
Pund-IT analyst Charles King says: “The message here is CIOs are looking primarily to tested, well-understood technologies that can result in savings or increased business efficiencies, whose support can be argued from a financial point of view.”
IT jobs will most likely drop in 2009, both for in-house staff and contractors, according to the new CIO survey conducted by Goldman, Sachs & Co and released last week. The goal of the study, which included 100 CIOs and other strategic decision makers at multinational Fortune 1000 companies, was to find out about the executives' IT staffing and spending plans for 2009.