Bullish IT industry must front out hard times

Outsourcing firms will suffer less than software and hardware manufacturers

Tom Young, Computing 21 May 2008

The UK IT sector should be bullish in the face of the credit crunch, say industry leaders, after trade body Intellect issued a report with six recommendations for improving the sector’s prospects.

Experts predict that software and hardware manufacturers will be hardest hit by the worsening economic climate, as outsourcing and systems integration firms continue to see solid demand.

Sean Finnan, president of Intellect and managing director of EDS UK, said some sectors of the industry were worried. “But with the necessary boosters we can help drive spending in the sector,” he said.

A fall in the number of public sector IT projects, as well as ailing balance sheets in UK financial services firms, remain causes for concern, but these factors have declined in importance, said analyst Richard Holway.

“The technology 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.

Corporate balance sheet issues have been overplayed in the media, said 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 is going to depend on the IT sector to help it build out from here.”

A skills crisis and a recent trend of Asian sub-continental outsourcers making plays for the European market were also causes for concern, said the Intellect report.

To help the industry reach full potential, Intellect recommends:

More skills in the workforce.

Improved trust in the sector, including improved data security.

Better communications infrastructure.

Higher professional standards.

Better exploitation of innovation.

Improved relationships with other sectors.

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