PracticeConsultingCorporate IT spending set to fall

Corporate IT spending set to fall

Corporate IT spending is likely to fall next year, but outsourcers will not benefit as companies rely on in-house expertise rather than outsource, according to the new head of analyst Meta Group.

Link: IT spending set to bounce back

For the first time, year on year spending on IT will fall next year, according to Meta’s new president and chief executive Fred Amoroso. ‘Unlike previous years where the rate of growth has gone down, next year 42% of companies will reduce their spending year-on-year. Just ten per cent will increase and 48% will keep spending flat,’ he said.

‘The economic turnaround has been predicted to be two quarters away for about two years now. It keeps on getting pushed out and out,’ he told VNU News Net.

Amoroso said nearly half of companies will cut spending on system integration and consultancy next year. But they will continue to spend on areas such as web content enablement and web infrastructure development, along with intranets and extranets because they increase access to customers.

But Amoroso, who previously managed part of IBM Global Services, said outsourcing may not benefit, despite companies looking to cut costs, because organisations will do the work internally, not externally.

‘The outsourcing market has been developing for ten years and those companies who look at outsourcing for cost reduction or as part of their business plan have already taken action. Companies have got more successful about improving their own efficiencies, so how much more margin is there to give to outsourcers,’ he said.

Amoroso predicted that the next wave of outsourcing will be business process outsourcing, where the broader functions are outsourced, such as payroll, rather than just the accounting systems.

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