UK IT experts optimistic on health of technology industry

But there is room for improvement if sector wants to avoid recession, says report

Tom Young, Computing 13 May 2008

Senior figures in the UK technology industry remained cautiously optimistic in the face of the credit crunch, as trade body Intellect published a report with six key recommendations for improving the health of the sector.

While software and hardware manufacturers suffer the effects of the worsening economic climate, companies which run outsourcing and systems integration services are seeing an increase in demand as firms look to use IT to save money.

Sean Finnan, president of Intellect and managing director of EDS in the UK, said that the mood in the sector was mixed.

"There are some sectors of our industry who are worried but generally there is an adding of value going on, and with the necessary boosters we can help drive spending in the sector further," he said.

A fall in public sector IT projects as well as ailing balance sheets in financial services firms in the UK are still causes for concern, but these factors are not as important as they once were, said analyst Richard Holway.

"The industry is driven now by consumer spending rather than enterprise spending, and I can't see any evidence that consumer tech spending is any less than a year ago," he said.

And the state of corporate balance sheets has been overplayed in the media, according to John Cridland, deputy director-general of the CBI.

"The bigger worry for many companies is inflation rather than access to finance," he said.

"The rest of the business community are going to depend on the IT sector to help them build out from here."

An ongoing skills crisis and a recent trend of sub-continental outsourcers making plays for the European market were also causes for concern, says the Intellect report. But the sector has the ability to fight off the threat, said Cridland.

"An awful lot of corporate IT users are strong selling into the European market and e-Skills UK has and is making a material difference to the skills problem," he said.

To help the industry reach full potential, the report says there must be:

- More skills in the workforce;

- Improved trust in the sector;

- Better communication infrastructure;

- Higher professional standards;

- Better exploitation of innovation;

- Improved relationship with other sectors.

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