IT Services, BPO to survive the US slowdown:Global Services

The slowdown in the U.S. economy would at best have a moderate impact on the global IT services and BPO industry, according to a global survey of service providers and buyers of IT and BPO services conducted by the CyberMedia publication for the outsourcing industry, Global Services in its forthcoming issue.

The online study aimed at analyzing the impact of the economic slowdown in the U.S. on the global outsourcing industry was conducted in the second week of April 2008. Of the 129 outsourcing buyers polled, nearly three-fourths were from the USA. Of the 203 service providers who participated in the study, nearly two-thirds belonged to the U.S. companies. The remaining respondents came from Europe, Latin America, India and China.

Impact on service providers  

According to the service providers, the economic slowdown in the U.S. would impact profitability and revenues in the short term. As a response, the industry is gearing up with a two-pronged approach of re-aligning existing service areas and increasing focus on non-US geographies.

Nearly 75% of the service providers said that by adopting this approach, their companies could marginalize the net impact on revenue growth and profitability,

Flow of new deals

Nearly half of the service providers, primarily representing BPO, infrastructure management and application maintenance areas, indicated that the slowdown has not impacted the deals pipeline in the current quarter.  On the contrary, many of these companies are seeing a stronger deals pipeline and accelerated sign-ups.

However, companies representing the new application development and offshore engagements reported delays, downsizing or renegotiation of contracts.

"The study also included in-depth interviews with analysts from Gartner, TPI, Compass Consulting, and The Hackett Group", says Ed Nair, Editor, Global Services.

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