There is no denying that the environment is fairly turbulent. When there is uncertainty, capital investments get impacted. Pricing pressure will thin out service providers’ margin. This will in turn force service providers to come up with newer customer-centric solutions and innovative engagement models.

Arvind Thakur CEO, NIIT Technologies Ltd. articulated, “Both for the IT as well as the BPO industry, I do not anticipate there to be budget cuts because we are seeing renowned focus on outsourcing. The cuts really would be on capital investments and not on operating expense related activities.”

As per Thakur, three types of actions will hit the investment front. One would be just to keep the business running; this one would be budgeted for. Then, there may be certain strategic initiatives -such as moving to a new platform- that makes the business more competitive. This one would be planned and also budgeted for. And then, there would be activities that independent businesses may feel appropriate to invest in. Here, the funding would be sought for from the user itself.

IT Spending $2.7 Trillion in 2012

Gartner predicts that IT spend is projected to total $2.7 trillion in 2012. The slowdown in US and Europe economic growth could suppress IT spends. According to Forrester Research, IT spends are expected to decrease to 5.5 percent in 2012 for a total of $2.15 trillion, from estimated growth of 11 percent in 2011.

Emerging economies such as India will account for $1.013 trillion. According to Gartner, the telecommunications market is the largest IT segment in India with IT spending forecast to reach $54.7B in 2012 followed by the IT services market with spending of $11.1B. The computing hardware market in India is projected to reach $10.7B in 2012 while software spending will total $3.2 billion.