IT consultants caught in recession lag

Providers of IT-related advisory and consulting services are in for an unhappy 2009, according to a new report by analyst group Longhaus.

On average, Longhaus' Australian ICT Services market overview found that less than two percent of existing client organisations plan to increase IT spending in 2009-10.

"Based on the study results it seems times will be especially tough for firms whose order book is oriented towards strategy or project-based activity such as Accenture, SMS Management & Technology, and Oakton," the report stated.

The report included a survey of 110 senior decision makers at Australian firms as to which firms they would spend more or less money within the next 12 months.

Of local service providers, UXC and Kaz were expected to earn no more or less while Alphawest, SMS and Oakton might be expected to lose some business. But some of the hands-on integrators such as Datacom, Hansen, ASG, Brennan and Gen-i could expect modest gains.

Of the big outsourcers, IBM stood out with customers expected to spend 10 percent more with Big Blue, but EDS (loss of five percent), Fujitsu and Logica (loss of 3 percent), Accenture and Tata Consulting (loss of 2 percent) and Satyam and KPMG (loss of 1 percent) are all expected to be worse off.

Longhaus Research Director Sam Higgins told iTnews he has noted over several quarterly polls of Australian CIOs and in a Tech Index Report being released next week that "organisations are pulling back on strategy, and architecture work - the types of work you would normally see ahead of application renewal activity."

Those organisations that provided "early phase strategic input" on IT projects would find themselves in a lull for the next six to nine months, he said.

"Looking at our forecasts and based on current behaviour, we suspect a fair portion will pick up at end of year and we will be back to where we were in 2010," Higgins said.

The Longhaus study also found that 43 percent of medium to large firms in Australia plan to outsource some part of their IT in the next 12 months, with one in five outsourcing application development or application maintenance.