IT spending likely to fall 5.2% worldwide, says Gartner

The worldwide IT spending is on pace to decline 5.2 percent this year. However, the IT industry will return to growth in 2010, with IT spending forecast to total $3.3 trillion, a 3.3 percent increase from 2009, according to research firm Gartner. In Asia Pacific, IT spending is expected to grow by five percent to reach $515.6 billion in 2010.

Peter Sondergaard, Senior Vice President at Gartner and Global Head of Research, said that this represented a fast V-shaped recovery for IT spending in the region. Emerging regions will resume strong growth, he said. By 2012, the accelerated IT spending and culturally different approach to IT in Asia will directly influence product features, service structures and the overall IT industry.

However, growth varies considerably by country, vertical market and IT sector. Sondergaard said that while software would post the strongest growth in Asia Pacific, telecommunications still represented the largest area of IT investment.

In Australia, the five-year outlook for enterprise IT spending is a compound annual growth rate of 1.3 percent, with total IT spending by Australian businesses to reach Australian dollar 56.4 billion by 2013. The vertical sectors with the highest IT spending growth would be communications (3.2 percent), healthcare (2.6 percent) and utilities (2.3 percent). While IT spending will increase next year, Gartner cautioned IT leaders not to be overly optimistic.

"While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012," said Sondergaard. 2010 is about balancing the focus on cost, risk, and growth. For more than 50 percent of Chief Information Officers the IT budget will be zero percent or less in growth terms. It will only slowly improve in 2011, he added.

Sondergaard said that the three most-searched terms by Gartner clients on gartner.com provide some clues as to the priorities of IT leaders around the world. Cost remained the most-searched term during 2009, although it peaked in May, followed by cloud computing. "Next year will be the year when cloud computing moves from the discovery phase to small pilots, as part of organizations' desire to move from owned to shared IT," he said.

The third most-searched terms on gartner.com were business applications such as enterprise resource planning (ERP) and customer relationship management (CRM). "We believe that 2010 will see increased focus on optimization of business processes linked to software applications, what we call application overhaul. That is what will drive growth in the software segment," Sondergaard said.

Agencies

Will GM coninue to layoff another 4,000 jobs?

After a night spent signing mounds of paperwork authorizing the transfer of cash, real estate, technology and other property, GM attorneys are expected to officially usher the new General Motors out of bankruptcy protection on Friday and onto a path toward a hopefully profitable future.

Once the world's largest and most powerful automaker, the troubled company is expected to emerge cleansed of massive debt and burdensome contracts that would have sunk it without federal loans. Spurred on by the Obama administration's support, the process took just 40 days, even slightly quicker than crosstown rival Chrysler Group LLC's 42-day timeframe.

On Thursday, a bankruptcy court order allowing GM to sell most of its assets to a new company went into effect. The new GM, 61% owned by the US government, will face a brutally competitive global automotive market in the middle of the worst sales slump in a quarter-century.

At a press conference on Friday, CEO Fritz Henderson will announce that GM will cut another 4,000 white-collar jobs, including 450 top executives. The company still employs 88,000 people in the US and 235,000 worldwide.

Agencies

New email server for Microsoft

Microsoft Corp said it will launch a test version of its Exchange Server, marking the latest development in the technology used by 65 percent of businesses worldwide to run their email systems.

The public beta test version of Exchange Server 2010, as the product is called, is the first of a wave of upgrades to Microsoft programs as the software giant gears up for the next release of its highly successful and profitable Office suite of applications.

Microsoft, which is gradually moving toward Internet distribution for some of its products to counter threats from Google Inc and other new competitors, said the latest Exchange Server can work entirely as an online service, which may attract customers looking to save money on hardware and support for their email and messaging systems.

For users, the new Exchange Server offers a few innovations, including the ability to "mute" streams of email, or opt out of conversations of limited interest to the recipient.

The new system also offers a range of tips to avoid embarrassment or wasting time, by warning users before they send mail to large distribution groups, to out-of-office recipients or to people outside the organization, which Microsoft hopes will protect against information leaks and reduce unnecessary e-mail messages.

It also has a function to transcribe voice messages sent to the computer. The full public roll-out of Exchange Server 2010 is scheduled for the second half of 2009 while Microsoft's Office 2010 is expected to be available in the first half of 2010.

Agencies

Is US new threat to India in BPO sector?

A downturn in worldwide economy, Satyam's fraud case and the terrorist attacks in Mumbai and supply chain and shipping cost issues in China are causing US technology companies to pull back from the two traditional outsourcing locations.

Citing these three global factors, an annual survey by BDO Seidman, LLP, one of America's leading accounting and consulting organizations, suggested several technology firms would choose US as future outsourcing location over India and China.

"While last year may have produced an outsourcing bubble, 2009 will see companies retrench to survive in the face of reduced demand. The US has become a far more viable option for them," said Douglas Sirotta, a Partner in BDO Seidman's Technology Practice.

"This year we are seeing three global factors that are causing US technology companies to pull back from traditional outsourcing locations, led by the recent boom and bust of the worldwide economy.

"Satyam's fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East."

Currently nearly two-thirds (62 per cent) of chief financial officers (CFOs) at leading US technology businesses say that their companies outsource services or manufacturing, it said.

However, the survey results point to a likely decline in international outsourcing in 2009: 22 percent say the United States is the outsourcing destination they are most likely to consider in 2009, compared to 16 per cent for China and 13 per cent for India. Another 19 per cent report no interest in additional outsourcing.

The survey conducted in January 2009 examines the opinions of 100 chief financial officers at leading technology companies located throughout the US. Other major findings:

Less than half (42 per cent) of the CFOs indicate that they have operations outside the US, compared to nearly double that amount (79 per cent) last year.

Nearly a third (29 per cent) of respondents say their primary concern regarding international growth is an uncertain business or political climate.

About a quarter (26 per cent), cite international business and tax regulations, with 21 per cent citing currency risk, 14 per cent intellectual property risk and exploitation, and 10 per cent training of international employees as their primary concern.

Currently the most common non-US locations for outsourcing are India (50 per cent), Southeast Asia, including the Philippines (31 per cent, down from 50 per cent in 2008), China (19 per cent, down from 46 per cent in 2008), and Western Europe (19 per cent).

For future outsourcing, the CFOs most frequently cite the United States (22 per cent), followed by China (16 per cent), India (13 per cent), Southeast Asia, including the Philippines (7 per cent), Latin America (7 per cent), Western Europe (6 per cent), Canada (5 per cent) and Eastern Europe (3 per cent).

Of those outsourcing, the most common functions being off-shored currently are: manufacturing (54 percent), IT services and programming (46 percent), research and development (35 percent), distribution (35 percent) and call centres (35 percent).

Agencies

Panasonic to layoff 15,000 jobs, closing 27 plants

Japan's Panasonic Corp. said Wednesday it was cutting 15,000 jobs and closing 27 plants worldwide as it braces for a big loss this due to the economic crisis.

Agencies

Google offers cloud software to businesses

Google is recruiting a sales force to offer the Internet firm's software to business customers worldwide who traditionally use Microsoft programmes.

Google will train people to pitch its Google Apps Premier Edition, an array of business software hosted online in what is referred to as "cloud services."

Cloud services such as spread sheets, word processing, and calendars are maintained and supported on Google computers and users access them when they wish by using the Internet.

Cloud services eliminate the need for packaged software to be installed and maintained on computers in homes or offices.

Google has been steadily increasing its host of cloud services, with a basic array offered for free and a Premier Edition available at a cost of 50 dollars annually.

"Google Apps has reached a level of maturity where it is useful and valuable for almost any business" said Google president of enterprise Dave Girouard.

"This programme gives IT solution providers an easy way to introduce cloud computing to their service offerings, while helping more businesses make the transition to this new era of technology."

Google said it will teach "resellers" how to integrate Apps into customers' business operations and give them a 20 per cent break on the price that they can pass on to customers if they chose to do so.

The programme has been tested with more than 50 pilot partners. "We believe strongly that all companies will adopt SaaS (Software as a Service) to one degree or another, and Google's reseller programme empowers us to be experts in the cloud," said Tony Safoian, president of SADA Systems, an IT consulting firm.

"Reselling Google Apps opens up new opportunities via new conversations we could not have had with prospective clients as little as two years a
go."

Safoian said Google Apps can be an easy sell, given that letting the California technology firm handle software updates, maintenance and disaster recovery can cost businesses 75 per cent less than doing it themselves.

Google Apps is seen as a direct challenge to a Microsoft empire founded on selling packaged software for installation on people's machines.

Until now, Google had relied on its own team to sell businesses subscriptions to its cloud services. Schools and charity groups are able to use the software services free.

Microsoft has responded with its own move "into the cloud" and says that the Windows 7 operating system it is preparing for release has been crafted with that in mind.

Agencies

Barclays likely to layoff 2,100 jobs

Financial services major Barclays is to layoff 2,100 in investment banking and money management, as part of its cost cutting measures.

"Barclays is cutting about 2,100 jobs worldwide in investment banking and money management as it slashes costs to cope with the fall-out from the credit crisis", The Financial Times said.

According to FT, the company is cutting 1,300 people from Barclays Capital, the debt-focused investment banking business, 500 from the Barclays Wealth private banking arm, and 330 in asset management business Barclays Global Investors. Overall, the cuts amount to 7 per cent of the three divisions' staff, it added.

Noting that Barclays declined to reveal where the job cuts would come, the newspaper said that the axe is expected to fall heavily in London and New York.

However, the bank would continue to hire in areas such as equities, the report published online said.

Last year, Barclays had acquired the US operations of bankrupt Lehman Brothers.

Financial Times reported that at Barclays Wealth, cuts are expected in London, Glasgow and the Channel Islands. Quoting Unite, which represents staff at Barclays Wealth's division, the daily said, "We cannot continue with this situation of daily job cuts without any justification or explanation of the broader strategy for the bank."

"The bank, which built the units aggressively over the past five years to account for almost half of revenue, said it wanted to be 'appropriately sized', given the current market conditions," it added.

The move is likely to spark fears of further cost-cutting in Barclays' retail and corporate banking division, which includes its bank branch network, the report noted.

Agencies

Is the worldwide bailouts 10 times bigger than Indian economy?

In their efforts to tackle the global economic crisis, the rescue packages announced by the governments across the world has crossed 10 trillion-dollar mark (about Rs 50,00,000 crore) -- an amount equivalent to nearly 10 times the total size of Indian economy.

The amount is believed to grow even bigger with the turmoil still being in expansion mode.

A lion's share of about three-fourth of the worldwide bailout package of about 10.1 trillion dollar has come from the world's biggest economy, the US, whose total national debt has also incidentally crossed the 10 trillion-dollar mark.

The size of the entire Indian economy, where the impact of global crisis has been relatively less disastrous, pales at about one trillion dollar.

These bailouts, which have been prevalent in both developed and developing worlds due to the financial turmoil that turned severe after the fall of Lehman Brothers, have come in various forms of financial stimulus by the governments across the world -- be it putting in fresh money into a crisis-ridden institution, bringing them under the government's fold or other fiscal measures.

America set the ball rolling for such packages, with the world's largest economy announcing 700 billion-dollar plan primarily to shore up the fortunes of the country's battered financial institutions. Taking into account other rescue acts by the US, its total bailout plan runs into more than seven trillion dollars.

Various European nations together have come up with about 1.3 trillion dollar in financial assistance apart from the European Commission urging the constituent countries to pledge nearly 254 billion dollar.

Further, Germany has thrown lifelines to the tune of 60 billion dollar to save the country's leading financial firms -- Dexia Bank and Hypo Real Estate -- both of which were battered by the worsening economic turmoil.

While Hypo Real Estate received 50 billion dollar, Dexia Bank got a lifeline worth about 10 billion dollar.

Among the developing nations, China has announced a massive 586 billion-dollar plan to boost its economy and the funds would be mainly utilised for infrastructure projects.

Other major bailouts in recent times include 572 billion dollar pumped by Ireland administration to strengthen the country's banks, 150 billion dollar pledged by Russia and 30 billion dollar put in by the Poland government.

Meanwhile, the whopping seven trillion-dollar injected into the economy by the US, includes billions of dollars of term funding facilities, currency swap arrangement with various foreign governments and rescue of Wall Street giants.

With the economic turmoil continuing unabated, the Bush administration recently came up with another mega 800 billion- dollar plan, which would help in buying toxic mortgage assets, among others.

Further, the Federal government threw a lifeline of more than 300 billion dollar to banking behemoth Citigroup. The rescue includes fresh capital injection to the tune of 40 billion dollar and guaranteeing assets worth 306 billion dollar.

In the United Kingdom, the administration has announced injection of more than 100 billion dollar, with funds primarily utilised to rescue its banks.

Bradford & Bingley, which was on the verge of collapse received nearly 33 billion dollar from the administration.

Source: Agencies