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June 2010 Quick Hits - News, Trends & Analysis

Pressure to Reduce IT Budgets in Public Sector
The private sector has been in a downturn for the past 2 years and IT directors have been creative at swinging the axe and reducing costs where possible. Now the same tough measures are being forced upon IT directors in the public sector. It is reported in computer weekly that, "Every IT project in central government is being reviewed and contracts renegotiated in an attempt to make the £95m savings announced by the government last month. Cabinet Office minister Francis Maude said departments, agencies and non-departmental government bodies (NDPB) have all been told to review IT projects to reduce costs". It is time for IT departments in the public sector to eliminate waste and look at all options for achieving more with less. This will include offshoring IT services which have often eluded the public sector, but now with a gun to the head from central government it is an effective way to reduce costs by at least 30% just on labour arbitrage.

IT Spending to Rise in 2010
2009 was one of the worst years for technology spending, but the good news is that companies are starting to open up the pockets. As commented on offshoring times, "Global information technology spending in 2010 will grow 9.3 per cent, led by computer equipment and software segments, according to Forrester Research. The numbers given by Forrester Research are more optimistic than similar forecasts by agencies like Gartner which has given a 5.3 per cent growth expectation. A 9.3 per cent growth will see global IT spending touch USD1,534 billion, with the US market accounting for one-third of it. This is expected to grow a further 8.5 per cent to USD1,664 billion in 2011, spurred by smart computing." This is good news for companies specialising in system integration and software development as there will be a clear need to help companies get the most value out of these new technologies.

Forbes IT Experts Advocate Outsourcing
As commented in Forbes several IT experts have noted other benefits from outsourcing apart from the obvious cost reduction "The pair noted firms that have managed to successfully create and sustain value over the last few years have utilised outsourcing to gain numerous benefits. As well as the financial rewards of capability-sourcing, the duo suggested the method can allow businesses to tap into global talent and can build partnerships that reduce risk and increase value. IT outsourcing can enable an enterprise to seize new local market opportunities and boost innovation, as well as enabling them to get new products to market ahead of competitors". Journalists in outsourcing have been on about all the benefits outsourcing can do for an organisation, but in this economy if the numbers do not stack up and show a clear labour arbitrage gain, I would advise IT directors to reconsider their options.

 

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