Outlook 2009
2008 was a year of strong growth for IT service providers. Gartner Group analysts report that the market expanded by almost 8%. However, there is no consensus among experts on the outlook for 2009. In 2008 we extended contracts with existing customers and acquired substantial new business.
Increased cost pressure at banks
The financial sector, the sector in which we operate, has been hit particularly hard by the current economic crisis, with banks and financial institutions under strong pressure to step up cost and process optimisation efforts so as to shore up profitability. In view of this situation, many institutes are overhauling their structures and revisiting the old “make or buy” question. In other words, they are considering how and to what extent it makes sense to carve services out of their own value chains and outsource so as to obtain cost savings. Of course, we as a IT service partner stand to benefit from this. What customers are primarily looking for in 2009 are quick-win cost savings, and cost pressures are being passed on to service providers. Banks and financial service providers are negotiating hard to push down their own costs by driving down the prices of their suppliers. This is happening both in the lead-up to new contracts and also when existing contracts are being extended.
Banks and insurance providers are outsourcing more smaller projects than before, in order to deliver the rapid cost savings that are particularly necessary in a crisis. And, with organisations already stretched by their core business activities in times of economic difficulty, they have no desire to grapple with the technical details of IT solutions. Customers are instead seeking a reliable, competent and professional service partner who genuinely knows and understands their business. Without this knowledge, their service partner will not be able to support them effectively or offer flexible services promptly at competitive prices.
FI-TS is equipped for the future
The developments in 2008 prove the differentiation strategy we rolled out in 2007 is a step in the right direction. We have focused fully and completely on the financial sector – because this is where our core competence and strengths lie.
The era of mega-deals is over
The observations of analysts and market researchers and the current economic scenario show that the era of outsourcing megadeals is definitely over. Of all organisations, it is the banks, insurance companies and financial service providers who are the keenest to obtain rapid cost savings by outsourcing their IT services. We are keeping close track on these market developments. Selective outsourcing, an emerging trend in 2007, gathered speed in 2008.
We understand what the industry wants, and have years of expertise to call on in consulting and service delivery for banks and financial service companies. We were quick to see the business was going to change. Which is why we realigned our organisation, adapted our services to the evolving needs of our customers and rolled out an innovative service offering. The next section of the report explains what we’ve done.