Though the information technology sector has for long made nice profits and nonstop expansion, things may change in 2009 as Forrester Research predicts a noteworthy decrease in transactions. Though Forrester originally speculated growth in this sector, it had to reconsider and modify those figures because of the present credit problem that is not vanishing soon.
The group’s VP Andrew Bartels stated that collapse of the fiscal system is the main actor behind this future fall in IT services purchase. So businesses will be reluctant to put their capital investments in risk now. The study further provides detailed data for different sub-units inside the wider IT sphere.
For instance, businesses manufacturing communication equipments will experience 7.8% decline in sales agreements, at least for some months. Computer equipment manufacturing businesses, likewise, are expected to bear a 6.8% reduction in sales this year. And the software sector is no exception of course; so license renewals will go down as well.
With all these associated dealers heading for a loss, those offering IT consultancy are obviously going to experience a few of the effects on their business. IT outsourcing sector seems to be the sole one that will probably proceed at more or less the same rate.
Another fresh paper released by Gartner has anticipated that IT service providers may be forced to lessen prices between 5-20% thanks to new rivals getting into this sector. At the moment, the increase in competitors is pretty much visible as more providers hop in to reap the profit opportunity this sector promises. Nevertheless, prices haven’t been affected much till now although that may vary in the near future if the competition continues increasing at the same speed.
Recession may drive firms to turn toward IT outsourcing and this may offset the stress sensed by some outsourcing service providers from raising competiton.
The trouble for the IT industry, though, is short-lived and may stay merely till 2010. It’s not that the demand for IT services has gone down; just that the time isn’t good for organizations to risk money here. Competent IT service providers may be in a better position at the end of this downturn, if they can employ these days to polish their portfolio by helping businesses in cutting expenses in this recessionary period of time.