In-Depth

IT Showing More Signs of Recovery

IT budgets, developer headcount is growing; study says outsourcing isn't dampening internal development

• By Stephen Swoyer
• 07/20/2004

If it seems that you’ve had more money in your IT budget to play around with this year, you’re not alone. Just over half of IT managers say their IT budgets have increased in 2004, while 20 percent say that their project workloads have also increased in the first six months of the year.

Those are two encouraging data points from a new survey conducted by researcher Evans Data Corp., which says that the expansion of IT department budgets and development staffs has helped to offset the attrition of software development projects that are otherwise lost to outsourcing. The result, Evans Data researchers say, is that more internal development projects are approved even as the number of projects outsourced has also risen.

Twice each year, Evans Data surveys more than 400 development or IT managers in companies with 1,000 or more employees on topics such as platform configurations, mainframe and large server usage scenarios and intentions, Linux projections, security, and Web services.

Among other encouraging signs, Evans Data researchers say that 40 percent of enterprise IT organizations have added to their developer headcounts over the last six months, while only 13 percent have reduced staff levels.

“What we're seeing are more signs of the recovery of IT. Development shops have started pulling dormant projects back out and more projects are being initiated than have been started in several years," said Evans Data analyst Joe McKendrick in a statement. “The big picture depicts a re-energized enterprise development space with increased budgets supporting more outsourcing and new developer hires as well as old projects being dusted off and started back up."

Some other interesting results of the survey:

• Application servers are hot: 60 percent of IT managers expect to increase spending for application servers in 2005
• Outsourcing is widely practiced: Six out of ten enterprise companies outsource at least part of their application development work
• Outsourcing has momentum: 27 percent of companies have increased their outsourcing, while only 8 percent have reduced it
• India is the most popular offshore destination, snaring 30 percent of all outsourced projects