IT execs optimistic after recession

By EgovAsia Editors | Apr 23, 2010

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Senior executives in the IT and telecoms sectors have little fear of a double-dip recession, according to the latest Tech Sector Barometer, a biannual survey published today by the Economist Intelligence Unit.
 
Some 70% of those surveyed say they expect demand conditions in their markets to improve over the next six months. This reflects a markedly greater degree of confidence than observed in the September 2009 survey, in which 60% of respondents expressed optimism. Only 5% of those surveyed now expect demand to deteriorate, compared with 9% in September and 47% a year ago.
 
The survey, Heating up, also shows there is still a sharp regional split. Executives in the Asia-Pacific remain the most confident, while those in Europe are the gloomiest. That is not altogether surprising, given the post-recession hangover affecting various European economies. "Europe's gloom could also reflect a longer-term worry that European tech companies will struggle to compete with lower-cost Asian rivals and more fleet-footed American ones," says Iain Morris, editor, IT and Telecoms, for the Economist Intelligence Unit.

In addition, a majority of the respondents from Asia-Pacific expect to see an increase in R&D spending over the next six months, while most respondents in North America and Europe forecast a reduction. A lag in this area would make it even harder for Western companies to compete with their Asian rivals in future.
 
The survey also finds that the percentage of respondents forecasting better financial health for companies in the sector has risen to 47% from 37% six months ago.  Respondents in Europe are by far the most pessimistic, with only 29% saying the financial health of tech companies would improve over the next six months, compared with more than 60% of respondents in both North America and the Asia-Pacific.  On the other hand, respondents in the Asia-Pacific were the most bullish on R&D activity: 54% say this will rise over the next six months, compared with just 38% of respondents in North America and 35% of respondents in Europe.