Gartner: IT services market to grow despite recession

Despite talk of a recession, the IT services market is doing just fine, according to an upcoming Gartner conference and report
Written by Colin Barker, Contributor

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 at the Royal Lancaster Hotel, London, will be told by the analyst group 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.

Over half of IT companies (55 percent) 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 percent will decrease it.

"The very large, visible players, like Microsoft and Google and so on, have started to invest and they are leading the way," said Claudio Da Rold, Gartner research vice president and co-chair of the conference, on Tuesday.

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 percent 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 percent of respondents planning to bring some services back in-house, while the survey before that, in 2001, had 32 percent planning to do the same.

When it comes to outsourcing, 65 percent 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 that 44 percent of respondents are considering changing their service providers and over half (58 percent) 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.

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