Cost optimisation to remain as a key focus area for technology clients in 2024

Bengaluru, 18 December: Revenue growth and cost optimisation will be the key themes that enterprises will focus on next year, indicating more cost takeout contracts for IT services providers globally.

According to a study conducted by IT consultancy firm, Everest Group, clients will look for more work from less spend next year. This is likely to translate into pricing pressure for IT services providers in 2024.

"'Do more with less' will be the mandate in 2024 for both enterprises and service providers. Enterprise leaders in our 202- Key Issues Study- are clearly focused on lowering costs and increasing profitability and will be placing high expectations on service providers with little room for rate increases. Enterprise spending in 2024 will be directed toward modernising technology, data analytics and process optimization. We will certainly see a ramp-up in GenAI investment as organisations continue to explore use cases and try to keep pace with the rapid changes AI is bringing. Overall, our research indicates that 2024 will be a 'nose to the grindstone' year of improving operational efficiency,"said Hrishi Raj Agarwalla, vice president at Everest Group.

Against this backdrop, the research firm expects that the global IT-BPMservices Industry togrow.

“A vast majority of enterprises (82 per cent) expect their global services budgets either to remain flat (39 per cent) or increase in 2024 (43 per cent). The headcount growth is also expected to be lower than 2023. Further, enterprises expect to increase the leverage of global business services and offshore locations,” the study points out.

Global IT services providers including Indian ones are going through a demand slump in 2023 with expected turnaround next year. However, many experts are pointing out that the first two quarters to be difficult for IT firms as IT spending may not see any significant change.