By Tim Ferguson, 11 December 2008 15:02
NEWS
Tech industry leaders feel the economic downturn won't have a huge impact on their businesses, despite economists predicting 2009 could be a tough year for the market.
Almost two-thirds (64 per cent) of CEOs and board members from the tech, media and telecommunications sector believe the situation will be no worse than in 2001, when the tech sector suffered its own recession following the dot-com bust.
Tech Hotspots: The list
1. Silicon Valley
2. Bangalore
3. London
4. Tokyo
5. Boston
6. Cambridge
7. Shanghai
8. Tel Aviv
9. Seoul
10.Beijing
11.Chennai
12.Pune
13.Singapore
14.Helsinki
15.Moscow
16.Hong Kong
17.Hyderabad
18.New York
19.Sydney
20.Shenzhen
Most of those quizzed said they expect the impact of the downturn on the sector to be neutral, although they acknowledged not everyone will escape unscathed.
The findings are part of research carried out by Cobalt, a corporate finance firm specialising in the technology, media and telecoms sector.
Speaking to silicon.com, Cobalt partner Chris Williams said the perception of tech has changed in recent years with IT now seen as a "utility", central to how businesses operate.
"It's right at the heart of the business now."
Perhaps more surprisingly, 91 per cent of tech CEOs surveyed by Cobalt said they expect their sales figures for 2009 will equal or even improve upon those seen in 2008, while half revealed they haven't experienced any material impact from the credit crunch so far.
Williams said the reason for the IT CEOs' confidence is related to changes in the tech industry since the beginning of the decade.
"I think the industry has moved on. The recession of 2000 and 2001 was largely a tech sector recession," he said.
"This time round our sector's not leading, it's following, so there's no reason why it should be the same as 2000 and 2001. This time it's being dragged into a recession along with everyone else," he added.
Some 65 per cent of respondents acknowledged concern over the economy, however, saying they see the economic downturn as the principle threat to the sector. Just over half (52 per cent) identified the potential for customers to seek longer payment terms, or fail to pay at all, as a worry.
But despite predictions of a tough 2009, 63 per cent said they think the recession will end in 2010.
Williams said: "The sector has a robust solution, good revenue models and it knows what customers want, so it's really just down to demand fluctuations."
More than 100 CEOs and board representatives from UK tech companies with revenues of between £5m and £300m took part in Cobalt's survey.
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1. Jeremy Payne
Got closer to the business, now get closer to the customer.
At last, some common sense! As so much of the economic downturn is based on confidence, it’s good news that senior executives in IT companies are reportedly so upbeat about their companies’ performance in 2009.
They are recognising the need to be much more responsive in a tough and fast-changing commercial and regulatory environment. And, just as in the earlier post-Y2K and dotcom hangover, they understand that in the coming year grandiose strategic and aspirational ‘rip and replace’ IT projects are out and this flexibility must be achieved with more tactical and agile approaches such as rules-based Business Process Management wrapped around existing applications.
So, two cheers. The full hurrah will be reserved for when IT gets closer to the customer, just as it has got closer to the heart of the business. Only then will the focus on process – understanding and bringing together the intent of both parties – deliver real gains in operational efficiency and customer service.
By adopting a non-invasive BPM solution which both minimises risk and can be implemented within just 90 days, it’s not too late to start – even though the credit crunch appears to be in full swing.
And, as all the best business textbooks say, get it right now and you’ll be perfectly set up to take full advantage when economic growth returns.