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Financial sector faces IT Spending Freeze as slowdown kicks in

The Outsourcing and Off shoring sectors are expected to be the the biggest winners in what appears to be a difficult year for the Financial IT sector.

A recent survey published by Computing (opens in new tab) and carried out by the Confederation of British Industry (CBI) and PricewaterhouseCoopers (PwC) showed that business volumes in banks and securities firms had fallen down sharply which will lead to job losses and budget cuts.

Citigroup, for example which has been directly hit by the American Sub-prime crisis, has announced that it will slash investment in Information Technology in a bid to cut its operating costs.

The bank's CEO, Vikram Pandit, revealed that the reductions could see IT budgets slashed by as much as 20 percent.

Already UK software and computer services companies have starting to preempt the downturn and have released a slew of profit warnings that doesn't bode well.

The current situation could provide with a window of opportunity for Offshore and Outsourcing companies like Infosys, IBM and Accenture or Tata with more budgets allocated to maintenance work rather than implementing new projects.

Rejeena Brar, a consultant for Pierre Audoin Consultants (PAC) told Computerweekly (opens in new tab) that banks and financial institutions will be reluctant to take on short term projects and will look to reduce running costs.

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.