Cap on Dutch IT services spend warning

The Netherlands project services (IT consulting, systems integration, and training) market declined by 11.5 per cent in 2009 as organisations slashed their discretionary IT budgets.

Many leading suppliers in the Dutch IT services market have suffered a double-digit percentage fall in revenue, PAC reports, including Logica, Atos Origin, and Ordina. Many project services suppliers are reducing their dependence on short-term consulting and systems integration work and build up their long-term annuity-based business.

PAC does not expect a major recovery in market conditions this year (2010), with spending on software and project services declining again, albeit at a slower rate. “Suppliers remain under pressure in 2010, but the market will return to growth in 2011 as organisations adjust to budget cuts made in the public sector,” predicts PAC consultant Rajeena Brar.

Key drivers for SITS spend in the short-term include post-merger integration, application modernization, sustainability/green IT, cloud computing, and mobility. The gradual movement from in-house development to third-party products and services will also drive momentum in software spending.

Outsourcing market is the only area of the Dutch SITS market that grew in 2009. PAC recorded a 0.4 per cent increase in this segment in 2009 and expects it to accelerate to 2.2 per cent growth in 2010. Application-related outsourcing will be the hotspot in the outsourcing sector as businesses ‘seek to increase operational efficiencies and offload the burden of managing systems in-house’, PAC says.

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