IT sector not recession-proof, analyst says
A leading analyst predicts IT companies face being hit by the “credit crunch,” and says the sector’s resilience to the global squeeze on finance will not last.
Richard Holway, technology industry analyst, a former director of Ovum, the IT research analysis and consulting company, also said a downturn in business could come in 2009.
Holway’s interview with Computer Weekly also said that his prediction included seeing a decline in revenue across the IT sector in 2009, a recession for the industry of up to 2%.
Technology companies dependent on discretionary spending, especially on consumers buying new products, will be “badly hit”, he said. “Their outlook is looking much less healthy than they were a year ago, even six months ago.”
Holway also made a suggestion during the interview that “the real problem with technology is not in the first six months of this year.” “Maybe it is not going to come in even the second half of this year, but I really do believe that 2009 could be the year when all of this finally catches up with the technology sector,” he added.
The prospects for different types of companies within the sector would vary, he said, adding that there are going to be some areas, which are going to grow dramatically. Some areas, unfortunately, he believes, are going to see fairly major declines. “But I think that the average, for the first time, is going to see a very minor, but still, a negative for 2009.”
Some outsourcing IT contract will be hit, Holway said, echoing a similar warning from the National Outsourcing Association (NOA) which came after Barclays announced it had decided not to renew an eight-year contract with Siemens providing back-office processes that is due to expire in September, and instead would integrate the work internally.
Holway however said that those that can deliver savings for their clients’ businesses by supplying outsourcing contracts would prosper.
“Any business-process outsourcer that can say to a company, ‘We can save you money, and not only that, but we can save you money this financial year,’ those companies are doing very well.”
Holway added he thinks the IT sector is probably going to do better than other areas, but said, “It is certainly not recession-proof.”
