The New Economics of IT, Part IV: Aussie IT Battlers Doing Better Than US Counterparts

The global economic crisis is having an impact on IT departments around the world. However, much like their overall national economies, Australian CIOs are feeling less pain than their counterparts in the United States.

The CIO Executive Council survey The New Economics of IT was conducted in the US in January and in Australia in February and March. While many similarities can be found in both groups, US IT executives are dealing with deeper and more profound cutbacks than their Aussie peers.

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See related slideshow: The New Economics of IT, Part IV | It’s Bleak Street for Hardest Hit IT Departments in The New Economics of IT, Part III

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More than half of the US respondents said that their overall IT budget was being slashed in response to unfavourable economic conditions. In Australia, the number was 35%.

Slightly more than two out of five CIOs in both countries are planning to reduce their spending on hardware and applications. However, a significant difference emerges when spending on outsourced services is examined, as 48% of the US CIOs intend to cut back, whereas only 28% of the Australians plan to do so.

Staff costs, however, are getting particularly sharp attention in America. There 35% of the CIOs expect IT compensation costs to be reduced, compared to a more modest 20% in Australia. This is undoubtedly a result of the fact that 39% of the Americans say they have already reduced IT staff either by layoff or through attrition in the past quarter, and a further 21% anticipate doing so in this quarter.

Hiring freezes are the norm in both countries, with 81% of the Americans having already frozen hiring or planning to do so in the next six months. In Australia, 68% of the CIOs are not hiring.

A somewhat higher percentage of Australians are reducing their spending on contractors and consultants than are their American peers. More than three out of four Aussie CIOs say they are cutting back in this category, compared to 69% in the US.

Both groups are fairly close in their approach to cutting back spending on new projects with 77% of the CIOs in both countries reporting they are postponing discretionary projects. Half of the Americans say they will be decreasing their spend on new projects as a percentage of the overall budget, compared to 43% of the Australians.

“There is no doubt that Australian CIOs are feeling the impact of the global economic downturn,” said Linda Kennedy, general manager of the Australian CIO Executive Council. “However, Aussie CIOs have a proud tradition of working hard to maximise the return they get on their dollar. In this challenging time, we expect them to show leadership and clever invention as they continue to support their organisations with strong information solutions.”

The CIO Executive Council is a global organisation which enables its more than 500 members to be more successful by facilitating the sharing of knowledge and creating content and programs around issues crucial to advancement of CIOs and the ICT sector. It is owned by IDG Communications, the publishers of this Web site.