A recent Forrester (Andrews, 2008) report explains that companies react differently in their IT plans during an economic slowdown, depending on the model adopted in each organization. Some companies will face more cost pressure; other firms will be concerned about the cycle of the business environment or possibly encounter more pressure to innovate and be competitive in the industry. Figure 6 illustrates the different categories of firms and the strategies that companies will consider, depending on their business model (Andrews, 2008).

**Figure 6. How Firms Respond to the Economic Crisis**<sup>**3**</sup>

<!-- Start of picture text --> Company's approach<br>Archetype Key priority in recession Importance for service providers Key positioningconsideration<br>* Reducing IT costs * Value‐added services and * Leadwith the pricing value.<br>Solid Utilities *Creatingnew operational consulting capabilities will be *Be willing to explain<br>efficiencies less attractive operational efficiencies<br>*Providing stable operations for *Deals take longer to close due *Plan for longer deal‐closing<br>the business to internal cost pressures cycles<br>* Reacting to changing and * Flexible pricing, billing, and * Clearly identify services that<br>uncertainbusiness needs payments options become can be guaranteed<br>Trustedsuppliers *Reducing risk priorities *Provide flexible payment<br>*Financial health and longetivity oprtions for the rest<br>of providersis scrutinized *Prove your financial viability<br>* Driving innovation * Potentially, this is the least * Prove your long‐term strategic<br>*Differenciatin the business price‐sensitive and most willing value and innovation capabilities<br>Partner Players from the competition to invest in value‐added services *Target with strong business<br>like consulting messasing like ROI<br><!-- End of picture text --> Source: (Andrews, 2008) According to Duke University’s Offshoring Research Network (ORN) findings, companies are continuing to implement their plans to offshore some of their functions despite the global economic crisis, and may even accelerate such strategies (Lewin et al., 2009). Figure 7 illustrates the changes identified by ORN in the key drivers of offshoring decisions as a result of the economic crisis. The results of the survey conducted in November 2008 show that the most significant driver in decision-making about offshoring is “taking out costs,” in other words, labor cost savings (see Figure 7). This directly boosts the competitiveness of developing countries in the offshore services industry.

The second most important change in offshoring services reported by ORN is the decision to offshore in order to enhance efficiency by redesigning business processes and to strengthen existing organizational capabilities for managing offshoring strategies. To achieve this goal, the ORN study suggests that company-wide strategies should be developed to help increase organizational flexibility, service quality, and above all, further cost savings.

> 3 According to the report, “solid utilities provide available and cost-effective infrastructure, trusted suppliers add product delivery capabilities and partner players are tightly aligned with the business” (Andrews, 2008, p. 4)

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