IT services expected to pull through the economic slowdown

by Editor 5/12/2008 4:20:00 PM

A new global survey of information technology service providers and clients who buy IT and business process outsourcing (BPO) services shows that the current economic slowdown in the United States will most likely not have a major impact on the global IT services and BPO industry.

The survey was conducted by CyberMedia and it included 129 buyers of business outsourcing services and more than 200 service providers, both groups mainly from the U.S.  

IT services giants such as Tata Consultancy Services, Infosys and Wipro will be at an advantage during the slowdown period as they are better equipped to pursue new business opportunities.

The survey also shows that, in response to the slowdown, the IT services industry is increasingly focusing on markets outside the U.S. and re-aligning existing services areas.

IT service businesses mainly plan to focus areas that are currently in demand – systems integration, BPO and infrastructure management – on markets outside the U.S.

Companies that offer business outsourcing, infrastructure management and application maintenance services reported that the market recession had not affected the deals pipeline in this quarter and that, in many cases, the exact opposite was the case.

On the other hand, businesses selling new application development and offshoring services said that they were suffering delays, downsizing or renegotiation of contracts.

More than a third of the service buyers said that there were no large scale cuts in IT spending and approximately the same number of respondents said that their business leaders may outsource IT projects in the short term.

The majority of respondents predicted that the staff most likely to be affected by the slowdown and subsequent spending cuts in the short term were IT contractors, full-time hires and IT consultants.

The area least likely to suffer the consequences of the recession is business process outsourcing, said more than a half of the respondents.

Global Services editor Ed Nair said:

“BPO vendors handle business-critical processes needed to keep the business running. Most BPO assignments are long-term annuity contracts and thus shielded from the effects of economic cycles.”

The survey will be published in the upcoming issue of the Global Services magazine.

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