Business IT spending has become more cost-conscious than ever, according to a Gartner survey, which found that the recession has led companies to make cost-containment and IT availability their highest priorities. Instead, a more risk-averse approach and slower technology adoption in favor of more tried-and-true solutions is in. The survey interviewed 213 U.S. companies at the end of 2009 to find out how the economy has impacted their plans to deploy outsourced IT services.
Compared to global averages, buyers in the U.S. show a slightly more-conservative approach to IT adoption, and a high focus on IT costs as they approach external services contracting, said Allie Young, vice president and distinguished analyst at Gartner. They also will focus on practical IT operations (keep the lights on and will pay less attention to business innovation in IT as a driver for using IT services. To capitalize on U.S. IT services opportunities, service providers must have current insights into buyers pain points, intentions and their expectations from external service providers (ESPs).
The survey results are a bit mixed, however. Forty-eight percent of respondents said they plan to increase their ESP spend this year. But of these, most indicated a move toward deploying maturing technologies that carry less, or manageable, risk, instead of next-gen solutions that may impose too much complexity, and thus, potential to miss business requirements. Instead, these respondents plan to use outsourcing to contain operating costs and guarantee IT availability.
The economy has also had a major impact on service contracts. 60 percent of U.S. buyers said they have renegotiated service contracts over the last two years, with 47 percent moving to offshore services delivery and 40 percent adopting technology as a service. As the recession grinds on, further changes or opportunities along these lines should continue; Gartner recommends providers pay more attention to proactively managing their clients, especially those who have reduced profitability through contract renegotiation.
The overall positive picture of the market willingness of U.S. buyers to use SPs in support of IT and increased spending supports Gartner forecasts for a return to growth in 2010, said Young. However, service providers will face a U.S. buyer with cost-focused priorities and a multiprovider strategy, which means many of the competitive dynamics of 2009 will continue. It is also likely that the influence of high levels of contract renegotiations and the strengthening influence of the CFO and procurement in many U.S. organizations seen in the past two years will continue to have an impact, thus keeping pressure on IT budgets and cost control but also opening up some issues of service quality.