Leading analyst firm IDC has revealed its predictions for the IT industry as a whole for 2008, with not a single mention of the 'r' word (recession). Analysts at the market data giant see the major outsourcing destinations of choice becoming increasingly central to the entire technology industry as the hotbed of future sales growth. IDC believes 2008 will see increased investments in popular destinations, such as India and China, along with the introduction of a raft of new online product and service offerings, especially in packaged solutions for smaller enterprises.

Analysts predict that global economic uncertainties will dampen IT spending growth in the US and elsewhere. As a result, worldwide IT market growth will between five and six percent, down from 6.9% in 2007. However, the implication of IDC's findings is that the vast majority of this growth will be in overseas markets. IDC expects vednors to concentrate on fast-growth, emerging markets, and to look east to Russia, India and China, but also Brazil – all locations where IT spending growth will remain strong.

The company's most interesting conclusion makes for challenging reading for all in the outsourcing industry, as it refers to the growth in software as a service (SaaS). IDC believes that to profitably reach the emerging, hyper-growth markets, suppliers must move as many services and products to the Internet, as this will mean lower distribution costs and easier and faster customer adoption. While the SaaS industry to date has seen a long tail wagging a much larger industry dog, with ambitious companies such as Salesforce.com and Netsuite grabbing the headlines and moving from small clients upwards into the enterprise, giants such as SAP and Oracle (Larry Ellison being a major investor in both of the SaaS leading lights) are now having to follow the model as well, in their case shifting focus downwards towards smaller and smaller enterprises.

IDC also predicts that the internet is compelling suppliers to create customer- and industry-specific solutions, and to build communities around these. Smaller enterprises require simplicity and out-of-the-box utility, says IDC, which means IT suppliers will be working with partners to prepackage solutions, rather than expecting customers or partners to put the pieces together. Clearly there are opportunities for both traditional outsourcing providers, and for the emerging breed of web-based companies who will begin to redefine our industry.