| | By Subhankar Kundu @ Monday, March 23, 2009 2:10 PM
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| | Research and analysis firm, Gartner has forecasted that the prices of IT services in outsourcing are to shrink by five percent to 20 percent during 2009 and 2010.
 India IT services players will undergo a drastic reduction in its pricing as they have been under significant pressure for pricing reductions due to the Mumbai terrorist attack, the scandal at Satyam, rupee exchange rate fluctuations, and continued wage inflation and attrition levels, Gartner anticipates.
Gartner has said IT outsourcing prices are likely to come down during the next two years due to the uncertain economic climate, constraints in IT budget and general market consciousness.
It also said that this fall in prices will occur due to quite obvious increasing competition in the market between traditional and new providers as more providers compete aggressively to keep revenue growth on target, while ensuring margins. Furthermore, cost-focused buying behaviors in the current economic phase will be a key factor behind the reductions for IT infrastructure outsourcing services from 2009 to 2010, with a great variability based on each single deal.
Gartner vice president, Claudia Da Rold said, “Regardless of the relative strength of outsourcing during a recession, many clients are reporting intense discussion with their vendors and renegotiation of contracts for terms and Conditions, service level agreements (SLAs), fees, volumes and low-cost offshore delivery locations. These items are under scrutiny to identify satisfactory concessions to further reduce the cost of services on a case-by-case basis.” X
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