The Hindu Business Line : ‘Expansion by MNCs could fuel IT deals in short term’

Mumbai, Feb.12 Even as uncertainty persists on when technology budgets would see an uptake, analysts feel that global expansion by multinationals could fuel deals in the short-term.

The current economic crisis has forced companies across geographies to go slow on technology deployment, which has impacted business volumes for the IT companies.

Many MNCs are increasing presence in the emerging geographies, and IT services continue to be a big need for these companies, said Ms Dana Stiffler, Director, AMR Research.

“Global roll-outs is the only positive thing I see. A healthy bounce back is not on for a couple of years,” Ms Stiffler said. There is also a big interest in alternative channels of delivery, and many companies are asking for the software-as-service model, or hosted services, she added.

Almost all companies are going to ask for ways to increase topline and take cost out of operations without affecting customer service, said Mr John Willmott, CEO, Nelson Hall.

Multinationals are going to extend presence in the emerging geographies and the IT services providers can help them do that.

“The US, UK and the other mature economies are 18 months into the credit crunch. Double that time is how long it would take to come around,” Mr Willmott said.

He said there had been some uptake in sourcing plans in the US since the fourth quarter of 2008. In the UK, it would happen in the first or second quarter of 2009, and for continental Europe it would take another three to six months.

“France and Germany want to do something about high costs and will look at offshoring much more seriously,” he added.

Mr Willmott said clients do not want to put in a significant amount of money. This has hit HR transformational deals. In the finance and accounts division, accountants are still busy with new budgets and financial planning. “They will think about outsourcing in another six months.”

Mr Peter Redshaw, Vice-President, Research, Gartner, said the downturn would see a rise in demand for traditional BPO services, and there would be a move away from knowledge process outsourcing because companies might not require those services.

There would also be a demand for bundling services as clients would look for a single point of contact for IT, infrastructure and BPO. “It is easier to manage and offers better cost benefits,” he added.

There would also be a flight to safety as companies would prefer to work with viable companies that can withstand the downturn, he added.

More Stories on : Off-shore Development | Software

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page