The uncertainty surrounding the UK economy is driving
banks torein back IT spending.
Analyst Pierre Audoin Consultants has revised its forecast,
expecting software and IT services expenditure to fall 4.6% in
2008, compared to 8.4% growth in 2007.
"Banks are in a position of not knowing how long or how bad the
credit crunch is going to be," said Rajeena Brar, consultant
with Pierre Audoin Consultants (PAC). "At this point banks are very
reluctant to take on short-term projects which last two months to
two years."
Because of this, IT consulting services, systems integration and
spending on IT contract staff and IT training are likely to see
cuts in spending during 2008.
However, Brar said
outsourcing and
offshoring are expected to rise as banks
seek to do more with reduced budgets, with banks closing parts
of their UK operations and
shifting these to locations such as India.
HSBC recently announced it will be
shutting
its Scottish payments processing centre and credit card firm
Capital One is
axing 750 jobs at its operations in Nottingham and shifting most of
the roles, such as account servicing, to offshore
locations.
US offshore supplier Cognizant has opened an IT development
facility in Canary Wharf this year
in expectation of increased business.