US, Europe cut IT spend as Russia, India and China boom
IT budgets are being slashed in the United States and Europe as extremly rapid growth in China, India and Russia leaves the Western tech industry in the shade.
Oct 10, 2008
IT budgets are being slashed in the United States and Europe as extremly rapid growth in China, India and Russia leaves the Western tech industry in the shade.
43% of Western companies are cutting back their IT spend and nearly 30% are scrutinizing IT projects for better returns, according to a report by analysts Forrester Research.
Meanwhile IT spending for 2008 in Russia, India and China is surging forward at 18% growth, far ahead of the 5.2% increase globally, reports Market Research Institute Eito.
However Europe and the United States are facing the credit crunch by trying to cut the amount paid out to vendors. The slowing United States economy has seen 70% of firms negotiating lower rates with suppliers and about 60% are cutting back on contractors. With budgets squeezed, just over 40% of companies plan to increase their use of offshore vendors.
But the overall levels of spending in the West in 2008 are predicted to remain far higher than emerging markets overall, with the EU and United States standing at 311 billion euros (US$436 billion) and 345 billion euros (US$484 billion) respectively, compared to 39 billion euros (US$54.7 billion) in China, 18 billion euros (US$25.2 billion) in India and 13 billion euros (US$18.2 billion) in Russia.
In Russia 5 of the top 20 IT service suppliers were non-domestic companies in 2007, with foreign providers such as HP and IBM slipping against their Russian counterparts. According to Pierre Audoin Consultants (PAC), local vendors were supported by mergers and acquisitions and better territorial coverage.
PAC added that Russia's outsourcing market remains immature due to client concerns about information security issues, with spending reaching around 93 million euros (US$130 million) in 2007.
Based on the article of Nick Heath, published on ZDNet Asia.
43% of Western companies are cutting back their IT spend and nearly 30% are scrutinizing IT projects for better returns, according to a report by analysts Forrester Research.
Meanwhile IT spending for 2008 in Russia, India and China is surging forward at 18% growth, far ahead of the 5.2% increase globally, reports Market Research Institute Eito.
However Europe and the United States are facing the credit crunch by trying to cut the amount paid out to vendors. The slowing United States economy has seen 70% of firms negotiating lower rates with suppliers and about 60% are cutting back on contractors. With budgets squeezed, just over 40% of companies plan to increase their use of offshore vendors.
But the overall levels of spending in the West in 2008 are predicted to remain far higher than emerging markets overall, with the EU and United States standing at 311 billion euros (US$436 billion) and 345 billion euros (US$484 billion) respectively, compared to 39 billion euros (US$54.7 billion) in China, 18 billion euros (US$25.2 billion) in India and 13 billion euros (US$18.2 billion) in Russia.
In Russia 5 of the top 20 IT service suppliers were non-domestic companies in 2007, with foreign providers such as HP and IBM slipping against their Russian counterparts. According to Pierre Audoin Consultants (PAC), local vendors were supported by mergers and acquisitions and better territorial coverage.
PAC added that Russia's outsourcing market remains immature due to client concerns about information security issues, with spending reaching around 93 million euros (US$130 million) in 2007.
Based on the article of Nick Heath, published on ZDNet Asia.