Global CIO: Glimmers Of Growth In Outlook 2010 Research

Our exclusive research shows IT shops may spend more this year, but not much on hiring people.

December 21, 2009

Offshore outsourcing isn't the answer to a bad economy, as far as our respondents are concerned. Half say they wouldn't do it regardless of the economy (55% took that hard line a year ago), and another 18% say they're less likely to in this economy. This dour view of offshoring most likely reflects the smaller size of the companies at which respondents to the 2010 Outlook survey work--48% are companies with less than $100 million in revenue. Our InformationWeek 500 research, published in September, found 57% of companies engaged in offshore outsourcing. InformationWeek 500 companies have revenue of more than $250 million, and may be more inclined and have the budgets to use offshore outsourcing.

Nevertheless, it does seem unlikely that this recession has sparked an offshoring surge--pressure to offshore jobs was already there and has been intense since the last recession. If anything, IT leaders have a more realistic understanding of how offshoring makes sense for real savings during this economic downturn.

In terms of infrastructure, the data center is where the action is. Only 16% of companies plan cuts in data center infrastructure such as virtualization and management software, and 35% plan increased investment. That hasn't changed much from a year ago. One area does show some change: infrastructure upgrades, such as for networking and wireless infrastructure, where 28% plan increased investment, up from 22% a year ago.

About a quarter of respondents expect increased spending on end-user applications, such as productivity software, and hardware, including laptops, desktops, and smartphones, up a hair from 19% a year ago. That end-user stat's a particularly unimpressive rise, given that Windows 7 is getting strong reviews, Office 2010 is due later this year, and the typical employee laptop's is being stretched past its typical lifecycle in this downturn.

There are two final data points worth highlighting, which could be interpreted as IT teams facing reality. Last year, about half of IT pros (49%) said the company's IT budget tracks the economy, and 42% said IT spending was less sensitive to economic changes. This year's results suggest a humbled IT team: 58% say the budget tracks the economy, and only 32% say it's less sensitive.

Similarly, 35% say IT has been asked to cut spending more than other departments, compared with 27% a year ago. IT teams are feeling a bit singled out. IT teams have had to do their part in the downturn, often by cutting their own costs and via IT-enabled projects aimed at cost-saving automation and process improvement within business units. Infrastructure efforts have dominated the IT agenda at many companies. CIOs have focused on running more efficient IT shops, pushing the kind of initiatives that take a backseat to growth-oriented projects when the business is expanding.

Our Outlook 2010 research suggests that this cost consciousness will carry into next year. However, there are signs that initiatives focused on growth, particularly customer-facing ones, will gain more attention. More IT teams are giving serious consideration to cloud computing, which promises both lower costs and faster time to deployment. In 2009, by early in the year, cutting costs was unmistakably the top priority. Next year, as the economy flirts with some level of recovery, it's less certain. IT needs to keep its cost discipline, while being ready to surge into growth mode where opportunities arise.

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Chris Murphy is editor of InformationWeek.

To find out more about Chris Murphy, please visit his page.

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