IT industry issues from Intellect - read our blog...
Politics, life after the reshuffle and the credit crunch
Concept Viability: Early engagement with industry
25/07/2006
Prospects for the ICT (Information and Communications Technology) industries look strong, according to the inaugural KPMG/Intellect survey, with public sector spending plans and government policies set to have a major impact on future growth. The survey, called ‘ICT Watch: A View To The Future’ was conducted amongst members of Intellect, the UK technology trade body, by business advisor KPMG. It found that 63 per cent of those surveyed felt more confident about the general business outlook than they did six months ago. ICT contributes 10% of UK gross domestic product and underpins many significant sectors such as financial services. John Higgins, Intellect’s director general, comments: “This feeling of optimism is supported by the fact that for most companies, sales volumes and values appear to have risen in tandem, with the majority reporting an increase or stable results over the past six months. At the same time, export sales are holding up and profitability is rising or remaining constant for most of our respondents.” The research found Intellect members upbeat about the domestic market, particularly the public sector, with a clear majority expecting UK demand for their products and services to fuel further growth in the next six months. The most positive responses of all came from smaller (less than £10 million turnover) companies. When asked which external initiatives might benefit their companies’ prospects, greater public investment in science and technology education was singled out as the major factor, while a significant proportion (59 per cent) agreed that increased tax allowances on research and development expenditure would be good for their businesses. Crispin O’Brien, head of technology for KPMG in the UK, adds: “The implementation of the Defence Industrial Strategy and the Transformational Government Strategy will drive demand within the ICT sector. The convergence of telecoms, broadband and broadcast will also create new opportunities for these industries.” Looking ahead, companies were bullish about the outlook for the next six months, with the majority forecasting increases in sales volumes and values as well as profitability. Only in the case of staff numbers were results more mixed, with a third reporting an increase and one in five reporting a decrease, suggesting a continuing focus on cost controls. One note of caution came from respondents from the larger (more than £250 million turnover) companies, with forty per cent of these firms envisaging staff numbers falling in the coming months. Commenting on the future of the industry, John Higgins concludes: “The overwhelming feeling from these companies is that better times are ahead of us and that the market is steady but challenging. There are barriers such as increased regulation, which could constrain growth by taking up increasing amounts of management time, but on the whole our first survey found the sector to be in good shape.”
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