CIOs more cautious on IT budgets, plan more outsourcing: survey

New CIO survey finds somewhat tighter IT budgets, and a couple of surprises: less money for cloud, and a new outsourcing destination.
Written by Joe McKendrick, Contributing Writer

Chief information officers are not expecting any robust increases in IT spending over the coming year, and are starting to ramp up more outsourcing initiatives. More IT work will not be going to India, but to another Asian nation. 

That's the gist of a the latest survey of CIOs priorities, conducted among members of the Society for Information Management (SIM). The survey was conducted by Dr. Jerry Luftman, professor and executive director of the Global Institute for IT Management.

Budgets in 2012 increased for 48% percent of respondents, compared to 56% in 2011. Budget decreases were experienced by 34% percent of respondents, compared to just 17% in 2011. Looking ahead, 46% expect to increase their budgets in 2013, and 21.8 percent say their budgets will decrease – projections in 2011 showed that only 15% expected their budgets to decrease in 2012.

A majority of CIOs are increasing IT staff salaries. Salaries increased for 60% of IT staff in 2012, compared to an increase for 66% of staff in 2011. Meanwhile, 11% experienced salary decreases in 2012, up slightly from eight percent in 2011. In 2013, 60% of respondents expect increases in IT staff salaries and 13% expect decreases.

A somewhat larger portion of IT budgets will go to offshore outsourcing projects. On average, seven percent of 2013 budgets will be earmarked for outsourcing, versus five percent this year. In 2011, the  share was two percent.

Where is the outsourcing going? India remains the leading destination, but the share has dropped from 58% to 43%. On the rise are The Phillipines, rising 4% to 12%, and Western Europe, going from 6% to 13%.

There has actually been a flattening of the share of budgets going to cloud. In 2011, 20% of companies dedicated more than 10% of IT spending to private cloud, which is down to 12% od respondents spending this level. For public cloud services, the percentage spending more than 5% of their IT budgets went from 19% to 16%. What may be going on here is there is less "cloud" as a budget item, since it is simply a part of application and systems deployments.

CIOs may be under the corporate magnifying glass more than in the past since more overall corporate revenue is going to the IT department. In 2012, the IT budget was five percent of corporate revenue; an increase from four percent in 2011.

(Photo: US Bureau of Labor Statistics.)

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