Hat Tip: Tech Sectors That Will Thrive in the Downturn

Last Updated Oct 29, 2008 6:52 PM EDT

Even hitherto impervious tech companies are a bit more circumspect in their forecasting. But there are still opportunities to do more than survive the downturn, as Silicon explains.

There are certain sectors of technology that could benefit from corporate belt tightening, says consultancy Frost & Sullivan's report, "ICT Opportunities in an Economic Downturn". The downturn could also result in a number of mergers and acquisitions as the industry consolidates.

"In particular, ICT solutions that shift costs from a capital to variable component, focus on productivity increases and cost reduction, and support organisational restructuring and acquisitions are likely to see growing demand," says Andrew Milroy, ICT director at Frost & Sullivan.

Here are some sectors that could do well from a downturn:

  1. Sustainable investments -- virtualisation, thin clients, power consumption modelling, videoconferencing. These may attract more business as companies look to both cut costs and improve their environmental performance.
  2. Outsourcing, managed and hosted services. Software as a Service (SSaS) lowers in-house costs and can be used for a range of services.
  3. Self-service systems such as mobile phone transactions, legal or HR-related paperwork, ebilling, online banking.
  4. Some managed services, including network services, leasing, and managed handsets.
  5. Outsourcing -- despite offshore outsourcing providers' reliance the financial sector, they are likely to benefit as companies seek to lower costs. A report by consultancy McKinsey predicts a rise in remote infrastructure management (managing servers and IT hardware from afar), which looks set to earn offshoring providers some $7bn this year. But contractual terms are likely to become more flexible.
  6. Improved data management -- business intelligence organisations look set to benefit from the greater need for compliance and transparency of reporting, while CRM specialists could thrive as companies seek to add value.