US slowdown to have moderate impact on global IT services; survey

New Delhi, May 12 (UNI) The slowdown in US economy will have a moderate impact on the global IT services and BPO industry, according to a global survey of service providers and buyers of IT and BPO services.

The online survey by the CyberMedia on global outsourcing industry conducted in the second week of April said of the 129 buyers polled, nearly three-fourths were from the United States.

Of the 203 service providers, who participated in the study, nearly two-thirds belonged to the US companies, while the remaining respondents came from Europe, South America, India and China.

The service providers said the economic slowdown in US would impact their profitability and revenues in the short term. But the industry is re-aligning existing service areas and increasing focus on non-US geographies to minimise the impact, the study said.

Nearly two-thirds of the buyers of outsourcing said their companies will go ahead with the planned projects. Asked whether there were across-the-board cuts in IT spending, nearly 36 per cent responded in the negative while admitting that their companies may prioritise the outsourcing of IT projects in the short term.

Almost half of the respondents identified cuts in the contract IT staff, full-time internal hires and IT consulting as the likely areas to get impacted the most in the short-term, according to the survey.

At the same time, one third of the respondents said strategic IT initiatives, systems integration, and managed services are likely to be allocated higher budgets.

CyberMedia said their findings were validated by interviews with the CEOs of leading global service providers.

It said large vendors with multi-shore delivery capabilities like TCS, Wipro, Infosys, Satyam and HCL Technologies will be better equipped to exploit new opportunities in the slowdown period.

But mid size IT services companies are more likely to face the combined pressure of exchange rate risk, lower billing rates, domestic inflation and slower deal closures, the study added.

The study pointed out that mergers and acquisitions will increase during 2008, especially in infrastructure management with companies like HCL Technologies likely to benefit.

UNI SAA AK NS1743