Global study: IT, professional services firms resilient in economic downturn

Staff Writers
Tuesday, 10 February 2009 14:41

IT Industry - Market

A worldwide study of 34 IT and professional services firms has concluded that the sector in general remained resilient to pressures of the world economic downturn despite slowing growth rates in their businesses.

According to U.S. market research and advisory firm, Technology Business Research (TBR), their Professional Services Quarterly (PSBQ) 3Q08 Benchmark study found that, in the face of the economic downturn, many IT services vendors had revamped their portfolios and focused on cost-cutting offerings, “which resonated well with clients and mitigated declines in revenue growth.”

Indian players remain growth leaders, the study also found, with Cognizant and Wipro taking the top spots.

Based on the 34 IT services and professional services companies included in the study, TBR said that the average growth rate for the trailing 12 months was 15.5%.

PSBQ Analyst Eugene Zakharov, said “India-based firms Cognizant and Wipro came in with the highest organic growth rates with 35.9% and 33.3%, respectively. Both Cognizant and Wipro are gaining footing and winning large-scale deals and Fortune 500 clients.

“Additionally, both are expanding aggressively into Europe and other growing markets and pushing portfolios of high-value consulting and engineering services. In general, the offshore capabilities and portfolios of the Indian players, as well as their geographic expansion, helped them retain the lead.”

Zakharov also said that demand for systems integration and consulting remained healthy in emerging economies," and “as governments and businesses in emerging markets build infrastructure and look for innovative technology, services vendors will be attracted to these regions; yet, TBR cautions that firms will need to adopt a balanced approach, as emerging market payback tends to be slow,” Zakharov warned.

Looking ahead, Erin Hichman, another PSBQ analyst, said “TBR expects to see vendors re-evaluating their own internal efficiencies and costs. Ultimately, we expect to see increases in the amount of resources shifted to lower-cost regions and in the use of automation. We also expect to see an increase in the use of repeatable solutions."