Confidence in the business outlook among the Information, Communications and Technology (ICT) industries has waned slightly over the last six months, according to the second KPMG/Intellect survey, due to less growth in public sector spending and export sales, than previously expected. Despite this the majority of respondents expected growth to continue for the next six months.
The percentage of respondent’s who feel more confident about the general ICT business outlook than they did six months ago, has dipped from 63% to 50%. The bi-annual survey, ‘ICT Watch: A View to The Future’ is conducted by KPMG among members of Intellect, the UK trade association for the IT, telecoms and electronics industries.
While the majority of respondents (61%) were positive about the prospects for UK private sector spend fuelling growth, the percentage of respondents who feel confident in the ability of public sector spending to do the same has reduced from 61% to 46%. Among smaller companies, with a turnover of less than £10m, only 29% see public sector spending increasing growth.
The survey collates respondent’s views on five key business indicators; sales volumes, sales value, export sales, profitability and total staff numbers. Notably, there was a shortfall in export sales compared to predictions, only 36% of respondents experienced an increase, compared with 55% who had expected to.
The survey also indicates that more investment in science and technology education continues to be regarded as the key external initiative which would benefit growth prospects in the software, IT services and electronics industries.
Crispin O’Brien, head of technology for KPMG in the UK, comments: “While the IT industry widely expects public sector spending to slow from the historically high levels seen in recent years, the failure of private sector investment and export sales to live up to the predictions of the last survey, has resulted in this dimming of optimism. Whether this is a longer term trend, remains to be seen, but the immediate future looks less certain than previously.
“In addition, the survey again highlights that the long term challenge for ICT industries continues to be education. The current decline in Science, Technology, Engineering and Maths graduates presents a major skills gap for the industry which needs to be addressed.”
Looking ahead 71% of respondents agree that further convergence of telecoms, broadband and broadcast media will benefit their businesses and 65% see the increasing uptake of open technologies and standards as also having a beneficial impact.
Commenting on the future of the industry, John Higgins, director general of Intellect concludes: “While the survey highlights some challenges for the ICT sector, it also shows that the outlook for the industry is mostly positive with the majority of respondents continuing to forecast growth across all five key indicators.”
-ENDS-
Related publication:
ICT Watch – A view to the future (2nd in series)
The second in a series of regular surveys conducted by KPMG and Intellect, the UK association for the high-technology industry, to help identify the key issues and drivers that may impact on the future performance of ICT industries.
Download PDF (716K)
Further information:
For further press information, please contact:
Claire Le Masurier
KPMG
T 020 7694 8639
E Claire.lemasurier@kpmg.co.uk
Deborah Nazareth
Intellect
T 020 7331 2168
E deborah.nazareth@intellectuk.org
Notes to editors:
The survey was conducted with 51 members of Intellect on 20th March 2006. The majority (two thirds) of responses came from companies within the IT software and services sector.
About Intellect
Intellect is the UK trade association for the IT, telecoms and electronics industries. Its members account for over 80 per cent of these markets and include blue-chip multinationals as well as early stage technology companies. These industries together generate around 10 per cent of UK GDP and 15 per cent of UK trade. For more information on Intellect go to http://www.intellectuk.org
