Technology companies face being hit by the "credit crunch" and a
downturn in business in 2009, according to a prediction by leading
analyst
Richard Holway.
The technology industry analyst, a former director of Ovum, the
IT research analysis and consulting company, forecast that the
sector's
resilience so far to the effects of the global squeeze on
finance will not last.
In an interview with Computer Weekly, he predicted that revenue
across the IT sector will decline 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."
"I would suggest 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 said that the prospects for different types of companies
within the sector will vary. "There are going to be some areas
which are going to grow dramatically, some areas, unfortunately,
that I believe 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."
He said that some outsourcing IT contracts will be hit, echoing
a similar warning from the National
Outsourcing Association (NOA).
That warning came after
Barclays said last week that it had decided not to renew an
eight-year contract with Siemens providing back-office processes
that is due to expire in September. Barclays will integrate the
work internally.
Nigel Roxburgh, NOA research director, said, "In financial
services, a substantial amount of business is outsourced and, by
virtue of its size, it will naturally be a target for review. What
one would presume will happen is that people will re-open
negotiations with their supplier looking for short-term cost
savings."
However, Holway said that IT companies that can deliver savings
for client businesses by supplying outsourcing contracts will
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."
He added, "I think that [the IT sector] is probably going to do
better than other areas, but it is certainly not
recession-proof."
Listen to CW's interview with Richard Holway.
For all the latest from ComputerWeekly on the credit crunch go
to
Credit crunch: the IT expert view>>