US economy, not terrorism gives NZ outsourcers jitters

New Zealand firms performing work outsourced from the US are finding the American market tougher in recent weeks. But they say this has yet to affect their business.

New Zealand firms performing work outsourced from the US are finding the American market tougher in recent weeks. But they say this has yet to affect their business.

Indian software chiefs say US firms are reluctant to further outsource their work to the sub-continent, claiming that after September 11 American bosses are too scared to fly there to visit potential contractors, or they are concerned about political uncertainties in India and Pakistan.

But any New Zealand impact comes from the state of the US economy rather than terrorism.

Lawrence Brook, general manager of Auckland-based CyberElves, which performs much work for US companies, says his business has not been affected by the terrorist attacks, though there was disruption to work in the company's New York office.

“The market is jittery, but it is business as usual, no change,” he says.

Brook says it is still early to convince people to outsource everything to the other side of the world, but if the current hostilities continue for another six months, US firms would see it “makes sense”.

Ben Northrop of Wellington-based website development firm Veda says his firm is “busier than ever”.

“It [September 11] had absolutely no effect on us,” he says.

His firm's work is more strategic and customers take a longer-term view of it, he says, and is unaffected by short-term business confidence.

However, Veda is concentrating its marketing efforts on southeast Asia and Australia because the US economy was already suffering before the terrorist attacks, Northrop says.

Merito, formerly the Wellington office of CyberElves, says the effects of September 11 are economic.

Its overseas work is concentrated in the UK, where the IT market is “pretty slow”.

General manager Brett Bailey says American IT workers generally are being laid off, IT budgets are frozen and “getting a decision from the US is pretty hard at the moment”.

Merito is focussing on the local market for the next few months, working with Cyberelves, with which it had an “amicable” split in August.

Bailey does not expect any improvement in the US until next year and believes the events of September 11 “should be good for us the medium-term from a security perspective”.

“More than ever, I believe we can capitalise on the fact that we are a pretty neutral country, miles from anywhere and pretty safe. We have nothing to do with terrorism and we won’t be bombed,” he says.

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