BDO reports dramatic drop in optimism index

Nick Grossman: Customers are placing orders again as purchases cannot be delayed forever.

As UK firms’ short-term business confidence sinks to a 17-year low, channel onlookers have picked out annuity revenues and public sector expertise as ways to beat the crunch.

Medium-term business confidence is also at its lowest level since the dotcom crash shortly after the turn of the century. Auditor BDO Stoy Hayward’s most recent Business Trends Report shows the optimism index, which measures business confidence two quarters ahead, plummeted from the neutral level of 100 in July to 97.4 in August.

Peter Hemington, partner at BDO, said the economy was feeling the pinch. “The dramatic drop in our optimism index, which has previously remained unexpectedly high, suggests that the reality of the situation is now hitting home.”

Nick Grossman, business development director of integrator 2e2, told CRN: “We are seeing more resilience in the IT market, especially IT services. Some customers that deferred projects have started placing orders again over the past couple of months. IT is such an enabler, people cannot delay things forever.”

Grossman also revealed annuity revenues accounted for about half of his company’s total. “If you are reliant solely on project revenues then you have only to see things slow down for a few months to have a pretty major effect on your business,” he said.

Pierre Lams, founder of mobility VAR Handheld PCs, said: “If your customer base is finance or retail you have challenges at the moment. Our customers in construction and government are attracted by the cost savings our applications can deliver.”