The global economic downturn is placing pressure on more and more companies to cut costs and maximize profits, leading them to outsource IT functions. According to research from Gartner, the IT services market will continue to grow in 2008, with spending on IT functions estimated to increase by 9.5%, reaching $819 billion. The strength of the IT services market can be further exemplified by the decrease in profit warnings among UK IT software service providers; in the hardware and equipment sector, only twelve profit warnings were issued in the second quarter compared to the twenty in the first quarter. Outsourcing consultants claim that companies seeking to reduce expenditures (as a result of these unfavorable economic conditions) should not even consider reducing spending on projects that affect the operation of a business, such as outsourcing contracts and major IT implementations.
So far, IT service providers have been left unscathed from any IT budget cuts. It is highly unlikely for long-term projects to be postponed due to economic factors. Additionally, small businesses continue to increase spending on IT, hoping to increase business and decreases dependence on manual processes (thereby reducing labor costs).
In this period of economic downturn, purchasers looking to outsource are increasingly searching for value-oriented contracts, heading towards locations in the east, hoping to save big and to eliminate the need to transfer staff. Although India has traditionally been seen as the place to outsource, China, Morocco, and Hungary are rapidly growing in popularity. In fact, the twenty largest IT services suppliers in the UK opened 21 new global delivery centers in January 2007, with four set up in China, three in Eastern Europe, three in Morocco, and only two in India.
Seeing as we are in a downturn rather than recession, companies have the resources to outsource; it is an expense they are willing to invest in, knowing the future benefits and savings. When outsourcing, companies should find IT service providers capable of catering to their needs; the provider should have quality resources and tools to find a strategic solution to the company’s needs. Similarly, finding a provider with a skilled tech team and personnel capable of communicating with the company and listening to its demands is of utmost importance in developing a quality product.
Both vendor and customer should look at this economic downturn as an occasion to do business more rigorously.
Source: ComputerWeekly
So far, IT service providers have been left unscathed from any IT budget cuts. It is highly unlikely for long-term projects to be postponed due to economic factors. Additionally, small businesses continue to increase spending on IT, hoping to increase business and decreases dependence on manual processes (thereby reducing labor costs).
In this period of economic downturn, purchasers looking to outsource are increasingly searching for value-oriented contracts, heading towards locations in the east, hoping to save big and to eliminate the need to transfer staff. Although India has traditionally been seen as the place to outsource, China, Morocco, and Hungary are rapidly growing in popularity. In fact, the twenty largest IT services suppliers in the UK opened 21 new global delivery centers in January 2007, with four set up in China, three in Eastern Europe, three in Morocco, and only two in India.
Seeing as we are in a downturn rather than recession, companies have the resources to outsource; it is an expense they are willing to invest in, knowing the future benefits and savings. When outsourcing, companies should find IT service providers capable of catering to their needs; the provider should have quality resources and tools to find a strategic solution to the company’s needs. Similarly, finding a provider with a skilled tech team and personnel capable of communicating with the company and listening to its demands is of utmost importance in developing a quality product.
Both vendor and customer should look at this economic downturn as an occasion to do business more rigorously.
Source: ComputerWeekly
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