Local public and private sectors are expected to continue to spend significantly on external IT Services according to the latest report from IDC. The report called New Zealand IT Services 2010 - 2014 Forecast and Analysis shows transformation and upgrade projects will still happen as many companies struggle to achieve both cost efficiencies and process improvements. It also states the overall market for IT services spend is forecast to reach NZ$3.3 million in 2014, representing a CAGR of 3.8 percent over the coming five years. Outsourcing represents 47 percent of the IT services spend in 2010. IDC senior services analyst for New Zealand business enablement: IT Services Rasika Versleijen-Pradhan says it won't be easy for companies. “While the New Zealand economy has certainly showed signs of improvement through increased consumer and business confidence, any certainty of a full market rebound in the short-term looks optimistic. Many organisations are still short on capital and struggling with cash-flow issues.” She says organisations need to make decisions about where to invest in IT. “If the business case doesn't yield an immediate ROI, it is hard to sell to the board, it's about linking IT contracts to bottom-line performance." Versleijen-Pradhan says organisations seeking to embark on projects that encompass new technologies will continue to engage with external IT service providers as their own resources will limit the scope. "Who these organisations choose to work with, will very much depend on who will survive the current market shake-up. Organisations will be short-listing those they trust and know are likely to be in for the long-haul, and are no merger and acquisition targets," adds Versleijen-Pradhan. She expects external advice in the key early project stages of cloud strategy development, and transitioning of legacy systems to cloud environments will drive growth of IT consulting services.