External IT spending will overtake internal budgets in financial institutions by 2004, according to a report by industry analyst Datamonitor Plc. IT in European Financial Markets, 1999-2004 forecasts that spend on IT from outside businesses will almost reach $11bn in a market worth $20.9bn.
The major factor influencing this trend is that firms are increasingly unwilling to undertake substantial implementations and then see them go wrong. If it goes down, it’s better to have someone else to blame, says Daniel Mayo, senior analyst at Datamonitor and author of the report.
Other reasons also include the rapidly changing systems in use combined with the attrition rates of IT staff. Within the arena of external IT, the fastest gainers will be the providers of packaged software, systems integration and outsourcing services, both predicted to increase by around 10% per year for the next five years.
