Tough times mean IT must fight to survive

Those who make smart use of innovative technology will be the ones who come out strongest

It is impossible to separate the turmoil in the financial services sector from the prospects for IT professionals.

The finance industry is the biggest spender on technology, and the biggest private sector employer of IT experts, both full-time and contractors.

The personal concerns for those working for banks and other firms caught up in the crisis hitting the City and Wall Street are obvious ­- among the thousands expected to be laid off there will inevitably be IT staff affected.

But the unravelling of the financial markets threatens to have long-lasting implications.

The merger plans for Lloyds TSB and HBOS highlight IT consolidation - of systems and staff ­- as one of the key objectives. Lloyds TSB is a major user of offshore
outsourcing -­ a move that is only likely to accelerate to ease the integration challenges it faces.

Even for those firms that are surviving the crisis, there will be pressure to cut budgets, and the lure of low-cost overseas resources will be hard to resist.

Lehman Brothers, meanwhile, spent $1.14bn (£624m) on IT last year ­- then last week sold two US-based datacentres to Barclays for $1.45bn.

There will be quite a bit of used kit turning up on eBay ­- or its business equivalent ­at this rate.

A look back at what happened to Sun Microsystems after the dot com crash earlier in the decade offers an example. All those failed e-commerce businesses that bought Sun servers sold them off as nearly new on the second-hand market, and the vendor’s sales plummeted.

IT suppliers that rely heavily on financial services customers will closely review their sales forecasts ­- some sort of hiccup seems inevitable.

But in difficult economic times it is important to remember ­- and to remind senior business executives -­ that the evidence of past downturns shows that those who make smart use of innovative technology will be the ones who come out strongest.

It is not an easy time for anyone in the finance sector, but IT leaders must step up and demonstrate that their teams are central to survival.