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Reinventing IT services
IT service providers have taken a hard fall, and it doesn't look as though things will get better any time soon. IT budgets aren't as hefty as they were in the fat times, and even if they were, it's not likely that companies would spend as freely as they once did: many managers believe that they haven't gotten their money's worth out of their big investments in enterprise software. Worse yet for outsourcers, the market is so flooded with tech talent that their old customers can hire it inexpensively, and competition from low-cost providers based in India and China is growing.
The take-away: The winners in this shakeout will be systems integrators and outsourcers that can look beyond their traditional megaproject model and offer projects that have a narrower scope and quickly deliver hard economic benefits.
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© 1992-2003 McKinsey & Company, Inc
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