Job cuts to continue till '05

BANGALORE: Even as we talk about an economy recovery, the implications are not sweet enough for many. According to leading research and analyst firm, Gartner, "continued job loss in high-paying white collar positions, primarily in the developed economies," is expected to be witnessed. The accelerated job losses are expected to last through 2005.

This is related to the vendor consolidation, with as many as 50 per cent of technology suppliers being eliminated from the competitive landscape, warned Gartner, in its Top 10 predictions for Asia Pacific in 2004.

In a series of regional forecasts focusing on the hot issues for 2004, Gartner said that the days of "the customer is king" will shortly end as market forces crush the weaker vendors. This will result in most IT sectors being dominated by a few large vendors that will not be governed by cut-throat pricing.

Partha Iyengar, Research Vice President at Gartner India. "We now see true recovery in the making. The combination of key technology advances, architectural changes, market forces and best practices will lead to a strong recovery for IT in the near future. However, the resulting impact will be both positive and negative. On the positive side, massive productivity improvements, significant increases in demand and enormous infusions of true innovation will occur. But on the negative side, vendor consolidation will result in continued job loss in high-paying white collar positions, primarily in the developed economies."

Iyengar said that companies will loosen their purse strings next year with CIOs' and IT chiefs taking advantage of the development to invest in technology to make their business stronger and more innovative. Enterprises will also spend incrementally to consolidate and realize the ROI from investments made in the dotcom boom days.

Outsourcing will accelerate across the region, with more enterprises looking to deliver IT and business process services. Gartner predicts that by 2005 the number of enterprises that enter into new outsourcing relationships will increase 30 per cent while the number of IT providers that claim outsourcing relationships will increase by 40 per cent.

"This trend will be driven by organizations' desire to focus on three key areas: core competencies, the need to access 'best-in-breed' capabilities and the ongoing requirement to remove costs from their existing operations," said Iyengar. "Enterprises will be courted by more service providers that claim outsourcing qualifications, requiring deliberate analysis of sourcing drivers and careful evaluation of market choices."

India continues to be a key beneficiary with Global Delivery Outsourcing becoming mainstream and an 'irreversible mega-trend', in both IT Services and, increasingly, BPO. This growth through outsourcing will be accompanied by increasing consolidation amongst the Indian vendors, an increase in the number of failures amongst smaller tier-3 vendors, that cannot articulate a compelling value proposition, as well as an increase in M&A activity in India.

Gartner also predicts that standards and regulations, including the Sarbanes-Oxley act in US and the adoption of globally recognized accounting standards in Australia, will start to have global knock-on effects.

In the software industry, Linux and Open Source initiatives will continue to make headway, but mainly at the cost of UNIX, not Microsoft. According to Gartner, by 2008, 60 per cent of large enterprises with 500 or more employees will have migrated 80 per cent of their Unix-based applications to Linux.

In the telecommunications sector over 17 per cent of Asia's 3.5 billion people will have a mobile phone connection by the end of 2004.

"The competitive situation in the key mobile markets in Asia Pacific, excluding Japan, means that W-CDMA has to deliver a clear value proposition against competitively priced voice services and where adoption of data services has been slow," said Iyengar. "Only six per cent of cellular service revenue came from data in 2002, excluding Japan, and will only top 21 per cent by 2007."

Gartner added that Wireless LANs will continue their unabated growth in 2004 with the rapid adoption being fuelled by declining WLAN equipment prices, Intel's strong marketing of its Centrino platform, burgeoning WLAN use in homes, improvements in WLAN security and further integration with wired LAN networking platforms.

"Most notebooks will come with bundled WLAN capability, enabling users to participate in WLAN networks with little effort," said Iyengar. "Almost every major enterprise is aware of the technology and has at least some limited deployments. Organizations must recognize that wireless has become a core part of every enterprise network and can no longer be regarded as an elective technology. As such, companies must 'own their airspace' as it becomes a resource to deliver computing capabilities."

In 2004, IT security organizations will focus on vulnerability shielding, mitigation and practices that improve the overall resiliency of IT resources and business processes.

"Intrusion prevention, rather than detection, will be key as IT security projects and spending will be driven by the need to improve resiliency in the face of rapidly spreading external threats, support emerging web services-based applications and provide more-efficient, functional identity and access management capabilities," said Iyengar. "Enterprises that rely only on proxy packet inspection will experience successful application-layer attacks at twice the rate of enterprises that use leading deep-packet-inspection approaches."

Iyengar explained that three major technology and innovation trends will underpin a range of future developments across industries and business functions.

"The connected society will evolve as a consequence of citizens having easy access to wireless bandwidth and personal mobile or wearable devices," he said. "In addition, smart networked objects will become prevalent as the cost of radio frequency identification and other tagging technology falls dramatically during the next decade. Semantic connectivity will be required to fully realize the opportunities created by physical connectivity, but due to the difficulty of achieving agreement around standards, this is likely to be one of the slowest-moving areas of IT innovation."