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Credit Crunch Not Hitting IT Spending

A new survey shows the tech industry continues to grow, with more than half those surveyed intending to spend more next year

The IT services market is set to shrug off any talk of recession, Gartner will tell a conference next month.

The audience at Gartner's Outsourcing & IT Services Summit 2008, taking place from 2 to 4 June in London, will be told that, despite talk of a recession, the IT services market will continue to grow, with bigger vendors, such as Google and Microsoft, doing particularly well.

More than half of IT companies (55 per cent) surveyed by Gartner, for a report related to the conference, said their organisations will increase their IT spending on external service providers, such as outsourcers, in 2008, while only 10 per cent will decrease it.

Claudio Da Rold, Gartner research vice president, said yesterday: "The very large, visible players, like Microsoft and Google and so on, have started to invest and they are leading the way."

The technology sector has seen "the potential beginning of a weak economy", according to Rold but he said he believes this prospect has begun to recede. What there is instead, he claimed, is "internal tension with [chief executives], as they are trying to manage many different areas". These areas include not just finances and pressure on resources but the need to satisfy growing IT demands caused by trends such as service-oriented architectures (SOA), web 2.0 and software-as-a-service (SaaS) architectures, Rold said.

In addition, companies are becoming less enamoured with the idea of shifting their IT to outsourcers, or of offshoring or nearshoring their business, according to Gartner's survey.

Nearly 30 per cent of respondents said they are considering bringing some of their outsourced services back in-house. This figure is twice as large as that in last year's survey. However, according to Gartner, the concept of bringing outsourced services back in-house is one that goes in and out of favour. The last such survey had 15 per cent of respondents planning to bring some services back in-house, while the survey before that, in 2001, had 32 per cent planning to do the same.

When it comes to outsourcing, 65 per cent of respondents to the Gartner survey said managing the performance of their service providers was their "most critical outsourcing management issue in 2008".

The survey showed 44 per cent of respondents are considering changing their service providers and more than half (58 per cent) are considering changing or renegotiating their existing outsourcing contracts.

SaaS, business process utility, infrastructure utility, remote-management services and cloud computing are the key "alternative delivery and acquisition models" respondents to the survey said they are most interested in.

Provided by—Driving Business Through Technology

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