Recession: Outsourcing 'won't bounce back this year'

Expect "only modest" growth for IT services market in 2010...
Written by Natasha Lomas, Contributor

Expect "only modest" growth for IT services market in 2010...

IT services vendors: don't hold your breath for a speedy recovery this year.

Analyst house Ovum has poured cold water on expectations of a quick bounce-back for the UK and Ireland's recession-hit IT services market.

Dr Alexander Simkin, co-author of the forecast, said some IT services vendors are pinning their hopes on a marked uptick in 2010 but warned they need to take "a more realistic view".

Ovum reckons the UK and Ireland market will not return to the levels of growth seen before the recession until next year at the earliest and is predicting real-term growth of less than two per cent this year.

"The market will remain challenging for at least 12 months with only modest growth overall during 2010," Simkin added in a statement.

Outsourcing - the road ahead

The IT services market will remain 'challenging' for at least a year, says Ovum
(Photo credit: Shutterstock)

Demand for IT services in the commercial sector was strongly impacted last year, Ovum said, as end users moved to a 'keeping the lights on' strategy.

However it expects IT services growth in the private sector to outstrip the public sector by 2012 - a change from the historical pattern - as public spending cuts bite into IT budgets.

According to Ovum, the impact of the recession on the IT services market has varied in severity across sectors: while demand for infrastructure outsourcing and support services has been relatively steady, consulting has been hit particularly hard.

Research from analyst house Nelson Hall also found 2009 was a bad year for consulting, with bookings down 15 per cent year-on-year.

The company's recently published ITO Index for 2009 also found system integration bookings down seven per cent last year but IT outsourcing showed relative resiliency - down around three per cent.

IT outsourcing accounted for 63 per cent of all outsourcing bookings by value, up from half in 2008, while BPO was down a fifth in 2009 compared to the year before, Nelson Hall found.

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