IT services spending heads east
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Shifting spending patterns highlight the sea-change in IT services.
Few industry watchers could doubt the considerable impact made by the Indian IT services providers during the last decade. The latest research from analyst group Gartner clearly identifies the depth and scope of this global sea-change.
According to the analyst organisation, global spending on IT services grew by 9% between 2006 and 2007, yet in Europe spending grew by just 6%. And Gartner predicts that the growth in Europe will continue to slow even further during 2007-08.
Of course, European companies have not stopped spending on IT services. Instead the Gartner figures show that it is the European-based IT services companies lagging behind – indicating a shift, where end-user organisations have moved to a more complex approach to buying services, the so-called multi-sourcing approach, where a variety of providers are used.
Gartner notes that the European providers are noticing the greatest slow down in spending in areas such as hardware maintenance and support, where offshore providers have been able to offer low cost automated alternatives. Gartner predicts that in the years to 2011, spending on this product support will rise by just 3.2%.
Meanwhile, analyst group IDC has been tracking consolidation within the European IT services market. Increasingly, European organisations are choosing the larger IT services companies, driving consolidation within the market.
It also notes the impact made by the Indian-based suppliers, which have not only fared well in application management and maintenance but are starting to win more complex application management deals. “Indian-origin companies are very quickly gaining presence in the services landscape, while their acceptance in Western Europe is increasing,” notes IDC analyst, Laura Converso.
Further reading
How Capgemini embraced India - Capgemini reversed its fortunes with a dramatic shift to a global delivery model.
The Reuters offshore story - Dave Weller, global head of solutions delivery at Reuters, discusses building an offshore resource.
Find more stories in the IT Services Briefing Room.
