US, European firms cut IT spending in 2008: Study
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In what could be a dampening piece of news for country's software companies, a survey has said that more than 40 percent of large businesses in North America and Europe have cut their IT budgets this year.
When asked how the economy will affect IT services spending, a huge 70 percent of respondents said they were likely to negotiate lower rates with suppliers, while 16 percent said they have already cut their spending.
It is estimated India's software companies earn nearly 50 percent of their revenues from the US.
The study carried out by Forrester Research attributed global slowdown to the cut in IT spendings.
The Forrester Business Data Services Report surveyed nearly 950 senior IT managers across North America and Europe.
The economy's effect on IT spending is evident in some specific data points in the report, it said in a statement.
IT departments in the financial services industry were hit the hardest - 49 percent of IT shops in the financial services sector have cut their budgets, the study said. At the other end of the spectrum is the media, entertainment and leisure industry, where only 39 per cent of respondents said they have had reduced IT spending.
IT departments in North America have been affected by the economy more than their European counterparts. As much as 49 percent of North American firms have cut their IT budgets compared with 31 percent of respondents in Europe. The Forrester survey was fielded in Q2 2008, prior to the deteriorating economic conditions in Europe.
Forty-three percent of firms have already cut their overall IT budgets in 2008 in reaction to the slowdown in the global economy, while 24 percent of firms have put discretionary spending on hold, the study said.
Twenty-eight percent of respondents said the economy has had no impact on their IT budgets.
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