Asia Pacific hedge against downturn for IT services firms

Peter Dinham
Wednesday, 29 April 2009 11:40

Business IT - Technology

Zakharov says cost containment and quick ROI value propositions are critical and most attractive for IT services clients in the current environment.

According to Zakharov, as a result of projects initiated prior to the recession, consulting & SI fared better in 2H08 than outsourcing, and he says, this dynamic is changing in 2009, with outsourcing taking the lead in terms of growth.

With the financial crisis biting even deeper, and faced with clients’ cutting costs and demanding cheaper services, IT services firms, themselves, are scrambling to rationalise their expense structures by trimming costs.

TBR reports that many firms have curtailed hiring, reduced recruiting targets and begun eliminating redundancies among general, administrative and sales staffs. And, in addition, firms with offshore operations are shifting more work to low-cost regions and increasing employee utilisation to preserve profitability.

And, in the face of the economic downturn, TBR finds that there’s severe pressure on the major vendors, with “revenue leaders struggling to maintain top-line growth.”

According to Zakharov, while the acquisition of EDS significantly increased HPS’TTM revenue –allowing it to leapfrog from number four in the third quarter last year to number  two, and ahead of major competitor Accenture in 4Q08 – he says, however, that the organisation remains “significantly smaller than IT services behemoth IBM Global Services.”
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