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Media Releases
2005

28 February
2005

IT spend survey reveals new priorities for UK companies

  • Security and disaster recovery now viewed as key priorities
  • Survey highlights trend for outsourcing IT services

A survey of UK companies and public sector organisations, carried out by law firm Shepherd and Wedderburn, has highlighted that four out of 10 organisations expect their IT spend to increase by up to 30 percent in the next 12 months.

The main areas for investment will be software purchase and development along with hardware including servers. Security applications, disaster recovery, storage, document and knowledge management are also seen as key priorities - a notable change in priorities with HR, finance and CRM (Customer Relationship Management) systems now taking more of a back seat.

Outsourcing is also a common occurrence for today's IT decision-makers, with many companies finding that efficiency savings can be achieved when all or part of their IT requirements are externalised. The flexibility that modern information and communication technology allows means that, as with manufacturing in the 1990s, companies are increasingly willing to outsource their requirements if this option adds value to their bottom line.

A total of 67 percent of organisations were found to outsource IT services. While the UK was the preferred region for outsourcing for many of the respondents, offshore outsourcing is becoming increasingly common. The USA, Canada, Western Europe, the Far East, the Middle East and the Indian subcontinent were all named as current destinations for IT outsourcing by respondents.

Liz McRobb, a partner and IT law specialist at Shepherd and Wedderburn, said: "The shift towards increased IT spending by organisations in 2005 is a sign that confidence is returning to the sector following the dip in recent years due to factors such as the dotcom crash and worsening economic conditions. With a quarter of our respondents declaring an IT budget in excess of £2.5million per year, it is clear that IT investment is once again a priority for UK businesses."

"Our study demonstrates that there is a noticeable change in spending priorities, with ‘protection factors’ such as security and disaster recovery now being the main focus of investment. This is not surprising considering the increasingly interconnected and interdependent nature of all commercial activity in the internet age, the major costs associated with security problems caused by viruses which can have devastating effects on businesses, and the requirement for improved internal controls and compliance in the light of Sarbanes-Oxley."

Commenting on the offshore outsourcing of IT services, Ms McRobb continued, "Security issues and service level concerns are, according to our survey, the two major factors restricting even more movement towards offshore outsourcing activity. Language ability, data protection compliance and resilience are also seen as potential issues when considering offshoring.

"In general, it is the large companies which are most likely to invest in outsourcing labour intensive communications such as call centres. This level of outsourcing requires significant investment and, while it may result in huge savings for large companies, smaller businesses looking for a more personal, responsive service have maintained their UK communication hub."

Based on the results of the survey, Shepherd and Wedderburn, in association with PricewaterhouseCoopers, is holding a free seminar on IT spend trends, how to ensure maximum ROI, as well as offshoring - examining both the benefits and the inhibitors. The seminar will take place in May at locations in Edinburgh, Glasgow and Aberdeen. For further information, please contact Angela Cleary by telephone on 0141 566 8521 or by email angela.cleary@shepwedd.co.uk.


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