IT budgets are being slashed in the United States and Europe as bullish growth in China, India and Russia leaves the Western tech industry in the shade.
Just under half--43 percent--of Western companies are cutting back their IT spend and nearly 30 percent are scrutinizing IT projects for better returns, according to a report by analysts Forrester Research which surveyed almost 1,000 execs.
Meanwhile IT spending for 2008 in China, Russia and India is surging forward at 18 percent growth, far ahead of the 5.2 percent increase globally, says market research institute Eito.
Europe and the United States, meanwhile, are facing the credit crunch by trying to cut the amount paid out to vendors. The slowing U.S. economy has seen 70 percent of firms negotiating lower rates with suppliers and nearly 60 percent are cutting back on contractors. With budgets squeezed, just over 40 percent 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 only five 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 buoyed 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.
Nick Heath of Silicon.com reported from London.
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