Services spending to remain tight in 2010

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Services spending to remain tight in 2010

Microscope contributor


The move out of recession will impact different parts of the outsourcing market at varying speeds as the constraints on user budgets continue with managed service providers the best positioned to see growth.

According to analyst house Forrester, which has quizzed IT executives in Europe and the US, the ongoing theme of getting more for less is going to remain leaving those banking on a return of the big outsourcing contracts at a disadvantage.

The majority of services budget is going into systems integration and project work with the next big chunk heading for application outsourcing but 34% saw cuts made to the amount of money spent on consultants.

"The pressure to reduce IT spending is going to continue well into 2010. The data shows no quick turnaround - it's going to be a tough year for services firms as clients increasingly ask them to justify ROI for IT projects and provide more value at a lower price," said John McCarthy, vice president and principal analyst at Forrester.

Companies that did intend outsourcing were looking for converged network and telco support and data centre expertise  and on the application front most IT directors were planning to increase packaged maintenance investments.

Adam Webb, CEO of Littlefish IT support, said that the services market had undergone a substantial change and the pressure on those resellers just offering break-fix was substantial.

"Break-fix revenue is on the decline and what those companies are being asked to do to get their revenue is incredible," he said.

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