IT firms feel the squeeze

The IT industry is beginning to see the impact of the credit crunch.

The IT industry is beginning to see the impact of the credit crunch.

SAP, has already lowered its third quarter 2008 forecasts in response to falling sales, now analyst house Forrester Research has found that IT directors are looking to reduce costs, putting further pressure on the IT industry.

Forrester analyst Pascal Matzke, said, "Clients are deferring project decisions, consolidating their supplier relationships, and starting to renegotiate prices with their existing providers."

The downturn is hitting IT suppliers hard, said Forrester. The analyst firm found that deals were getting cancelled as some businesses ceased to exist. One IT firm told Forrester, "It is pretty hard to manage a sales pipeline if some of your key prospects or customers simply disappear overnight."

In another case highlighted by Forrester, CIOs were also deferring buying decisions. "We have not had any major cancellations yet. But clients are telling us that they need more time to understand the new situation. As a result, we are seeing many decisions getting deferred by about three to six months," one IT supplier told Forrester Research.

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