All things considered, 2008 was a relatively stable year for the IT services industry. Deals got smaller and shorter, but they grew in number. The second tier providers and Indian vendors did well, along with Accenture and IBM Global Services.

IT outsourcing providers were largely unscathed by the economic downturn throughout much of the year. “It took almost two quarters for the effects of the slowdown to manifest in providers’. By the end of this year, however, CIOs became too distracted by the economic destruction surround them to do any outsourcing deals. “As the markets crumbled and CIOs were confronted with the prospects of their personal employment, naturally, decision-making around strategic cost cutting and efficiency took a back seat,” says Kublanov.

That’s all poised to change in 2009. The only problem is, that may be bad news for both IT services providers and their IT leader customers.

Back to the future: More — not better — outsourcing

“Whenever there’s a downturn people outsource more, not less,” says Gartner analyst Linda Cohen. “Organizations want to take costs out wherever they can. CFOs are pounding on their CIOs to just outsource it, just offshore it.”

“The difficult economic conditions will push companies further than before to consider what stays in house and what gets done by others,” agrees NeoIT’s Kublanov. “Additionally, demands by the business for further cost reduction will need to be addressed in an environment where many companies have already leveraged labor arbitrage to source the low-hanging fruit.”

CIOs may sign hasty deals for a short-term returns. In a case of what Cohen calls “convenient amnesia,” IT leaders may forget all the lessons they learned rushing into bad outsourcing arrangements and chasing elusive benefits. “Everyone has a gun to their head right now,” she says. “But the financial voodoo of outsourcing deals doesn’t work. You have to accept the reality that if you hand your mess over to a vendor, you’re going to eventually have to pay for that burden they take off your plate. You can pay it now or pay it later, but you’re going to have to pay.”

Bad deals can lead to degradation in service performance and price increases down the line. Smart buyers will ask for shorter term lengths, but in times of economic pressure rational thinking is hard to come by. “People do bad deals for short-sighted reasons,” Cohen says. “We’ve seen it before and we’ll see it again.”

The global economic slowdown is impacting the Indian software services sector as never before. With the US, Europe and Japan slipping into recession, demand for outsourcing and offshoring IT services will slacken over the next three-four quarters.

The slowdown is likely to last 12-15 months. New application development is expected to be affected the most. Smaller companies looking for funding are equally affected by the tight credit market, while the large outsourcing firms/IT bellwethers are sitting pretty on cash on their balance sheets.

According to global technology and market research firm Forrester, slowdown in the technology sector will continue till the third quarter of 2009, while outsourcing growth will remain moderate till 2010.

“Slowdown will force companies to turn to vendors to help cut costs. Growth in IT outsourcing revenues will remain moderate due to the use of lower-cost offshore resources and smaller-scale outsourcing deals,” Forrester said in its report “Outlook for the global IT industry”.

Smartphones have been around for longer than most people realise. Symbian, the company founded to develop a new operating system specifically for phones, celebrated its tenth anniversary this year. However, they have always represented a small fraction of the global handset market, with broader popularity always predicted as ‘just around the corner’.

One device that has perhaps been more responsible than any other for popularising the smartphone has been Apple’s iPhone. Although originally launched in 2007, this year ushered in an updated model with support for 3G networks, enabling users to make better use of Apple’s desktop-class Safari web browser.
HTC took the approach of adding a touch-based interface that sits on top of the Windows Mobile operating system. This has been copied by other vendors, such as Sa msung with its Omnia model, and to lesser extent by Sony Ericsson with its Xperia X1 that is mostly stylus-driven, but adds some gesture-based controls.

The iPhone’s influence can also be seen in RIM’s BlackBerry Storm, the first to do away with what had been a vital feature of the BlackBerry: a decent Qwerty keyboard for composing email messages.
RIM added its own innovation in the form of a screen that gives mechanical feedback when pressed, designed to make the on-screen keyboard feel more like that of a physical one, as well as providing reassurance to the user that they have activated an on-screen control.

This autumn also saw the first handset based on Google’s Android platform in the shape of the T-Mobile G1. This has many of the features of a touch-based device, enabling users to control the device and reorganize the screen layout using fingertip control, but the display also slides aside to reveal a mini Qwerty keyboard for text entry. However, the G1 is a heavily web-focused device that possibly has more in common with mobile internet devices than most smartphones.

While touch-screen phones have been getting attention in the consumer end of the market, business users have also had new devices. RIM introduced the BlackBerry Bold, a new high-end Qwerty device with an updated user interface, aimed at professionals.

Nokia also introduced the E71, a device aimed at the same email-centric business base as BlackBerry users. The sleek and slim (10mm thick) handset has proved a hit with many professionals, thanks to its Qwerty keyboard and features such as the ability to lock the device by sending it a secret text message, and support for separate work and personal home screens.

Other business-focused handsets included HP’s iPaq Data Messenger and Voice Messenger models, which were representative of a great many other handsets based on Windows Mobile 6.1, itself released earlier in the year.
This version of Microsoft’s mobile platform added a number of enhancements aimed at business customers, the most significant of which is the ability for IT departments to control and manage handsets via Active Directory. It also added a new VPN client and various user interface enhancements.

This year also saw the shock announcement from Symbian that its smartphone platform is to be freely available in future under an open-source license. As part of the move, Symbian itself has effectively been acquired by Nokia while management of the platform, the most widely deployed smartphone software globally, is to pass to a new body called the Symbian Foundation, which is expected to begin operations in 2009.

Also due in 2009, according to rumors, is the long-awaited new mobile platform from Palm. According to plans announced at the time, this will combine features of the current Palm OS with a Linux-based core, and a greater focus on web access.

With all of this happening, 2009 looks set to be just as eventful a year as 2008 has been for the world of smartphones.

Hi Guys,

This is Thomas Ninny a free lancer writer and journalist. Specialising in offshore and outsourcing, benefits, features, international issues and history too. So be ready to get all the needed information on all these issues!