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More than half of IT contractors are worried that a tightening of belts by clients will lead to their freelance jobs being pinched. Fears about job security among one-person IT suppliers were rare in February, when just one in 10 expressed a concern, but since then contract layoffs have risen 20%. More than 50% of IT contractors are now nervous about their jobs, up from the 12% who felt the same six months ago, a survey of 120 contractors by Interquest found. Executive chairman Gary Ashworth hinted that the findings were a sure sign that “economic gloom and doom” was taking its toll on workers on the supply side of IT. But he added that the industry’s resilience over the past year, while other industries suffered lower profits and job cuts, boded well for its future. “IT has been one of the last fields to be affected this time, meaning it will be one of the first areas to pick up again when the economy revives,” he said. “No sector is immune from economic fluctuation, but any downturn in IT is only likely to be temporary, because IT companies simply cannot survive without it.” Ashworth said the public sector remained a "very heavy IT spender," while in the private sector, retailers were still after Web developers to give their sites the edge. Asked about the downturn’s potential drag on IT, Richard Holway, a former director of Ovum, has said the optimistic view was that it will be slight, because IT is now so “embedded” into organisations. But his predictions suggest contractors are right to be nervous, as he said they will get fewer opportunities in 2009, because he predicted the UK’s overall budget for IT services will be cut, by up to 2%. Analysts at Gartner are not so sure that the IT industry, as a whole, faces the prospect of a recession this year, or even the next: they predicted spending will rise 8% in 2008, with the growth led by IT services and software, though they agreed it will slow in 2009. However in line with contractor fears, analysts at PAC yesterday warned that a spate of IT services contract terminations suggests a “shift in power” away from IT suppliers, towards IT buyers. This week, Transport for London gave TranSys its marching orders for its contract to run the Oyster card, while Barclays also decided not to renew a BPO deal with Siemens. PAC reflected: “With some outsourcing relationships being several generations old, clients now have the experience to develop more robust platforms from which to bargain.” Despite this power shift, the analyst said that out of all the companies to update their IT services contract with a third-party in the six months to July 2008, only 13% switched supplier. “A factor that could impact this trend for renewals is the accelerated M&A activity in the second half of 2008,” PAC said. “This will have ramifications for these companies' IT services and BPO providers, with incumbent providers nervously wondering whether the new owner will bring in its preferred supplier or even take the service back in-house. “For example, RBS, which historically has preferred to run most of its IT in-house, recently acquired ABN Amro. Reports in the Dutch press claim that RBS is considering reversing some of ABN Amro's outsourcing deals. As these contracts have a total value of $2bn, there is a lot at stake.” Aug 20, 2008 Email this article Printer friendly page Previous Page
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