Services sector to suffer as spending is frozen

While IT spending on security and virtual private networks (VPNs) is expected to increase substantially this year, it's bad news for the services sector with many technology decision-makers planning cut-backs in IT outsourcing and consultancy.

According to the RoperNOP Technology Confidence Barometer, conducted in association with silicon.com in Europe, security and VPNs will be the two biggest areas of growth in 2003, with spend up 8.6 per cent and 6.7 per cent respectively when compared with last year.

High-speed data transmission is also a top priority for Europe's CIOs, with a 6.5 per cent increase in spend planned on such technology.

Web-based applications are also high on the agenda, along with wireless LANs and storage.

But the services sector can expect another relatively grim year. Outsourcing spend is predicted to grow by just 0.9 per cent in Europe, while consulting budgets will only increase by 1.9 per cent. However, these figures are up on 2002, when growth was flat.

Richard Jameson, managing director of RoperNOP Technology, was keen to distinguish business process outsourcing - one of the hotter buzzwords in the industry at the moment - from IT outsourcing.

He told silicon.com: "Business process outsourcing is likely to remain a major growth area. Our survey asked specifically about 'traditional' IT outsourcing, and it seems many companies are keen to keep such functions in-house in an attempt to keep a close eye on costs."

Middleware is also considered low growth in 2003 - Europe will only see a 1.9 per cent rise in this area.

This is the second RoperNOP Technology Confidence Barometer. The fieldwork was conducted in November and December 2002 in partnership with silicon.com in Europe and Cahners and CMP in the US. Over 1,100 interviews were conducted, making this one of the most comprehensive surveys of its kind. We'll be bringing you more in-depth results over the next few days.

For more information on the survey, contact Richard Jameson, managing director of RoperNOP Technology, on 020 7890 9234.