New York, May 11 (IANS) Despite
fears, the slowdown in the US economy would at best 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 study also found that service providers plan to focus on non-US
markets and that the new hot areas are systems integration,
infrastructure management and BPO.
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, according to the study
published in the forthcoming issue of Global Services magazine from the
CyberMedia group.
The study polled 129 outsourcing buyers, of which nearly three-fourths
were from the US, and over 200 service providers, two-thirds of which
belonged to US companies.
According to the service providers, the economic slowdown in the US
would impact profitability and revenues in the short term. As a
response, the industry is gearing up with a two-pronged approach of
re-aligning existing service areas and increasing focus on non-US
markets.
Nearly 75 percent of the service providers said that by adopting this
approach, their companies could marginalise the net impact on revenue
growth and profitability,
Nearly half of the service providers, primarily representing BPO,
infrastructure management and application maintenance, indicated that
the slowdown has not impacted the deals pipeline in the current quarter.
On the contrary, many of these companies are seeing a stronger deals
pipeline and accelerated sign-ups.
However, companies representing the new application development and
offshore engagements reported delays, downsizing or renegotiation of
contracts.
"The study also included in-depth interviews with analysts from Gartner,
TPI, Compass Consulting and The Hackett Group," said Ed Nair, editor,
Global Services, in a press release.
Nearly two-thirds of the outsourcing buyers said that their companies
will go ahead with the planned projects.
Over a third of the buyers denied there were across-the-board cuts in IT
spending, while an equal number admitted 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.
One third of the respondents said that strategic IT initiatives, systems
integration, and managed services are likely to be allocated higher
budgets.
Arkadiy Dobkin, chief of EPAM Systems, the Russian IT services company
with well entrenched delivery capabilities spread from Ukraine to
Budapest, said: "We saw a slight slowdown in the first quarter, but we
are not sure whether it's the effect of the first quarter or the
recession."
EPAM employs over 3,000 people and has an exposure of about 45 to 50
percent in the US market. It sees encouraging growth opportunities in
Europe, particularly the economies with heavy reliance on oil and gas.
The BPO-related services are least likely to be affected by the
slowdown. Almost half of the respondents said that within BPO, spending
on sectors like finance, procurement and customer care will go as per
plan. In the claims, mortgage and travel related BPOs, 44 percent of the
respondents felt that their clients would continue their BPO projects.
"BPO vendors handle business-critical processes needed to keep the
business running. Most BPO assignments are long-term annuity contracts
and thus shielded from the effects of economic cycles," said Nair.
Midsize 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 report said.
BPO companies like Genpact, WNS Global Services, EXL Services and
Cambridge are among the companies that are more likely to offer better
value to clients during this period, the study found.
Based in Gurgaon, CyberMedia brings out 15 publications, including
Dataquest, PCQuest and Voice&Data.
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