Channel jobs on the line in 2009, research claims

But some firms are poised to reap the benefits of the economic slowdown, Plimsoll predicts

Nearly 5,000 jobs could be under threat in the channel next year as belts begin to tighten to cope with the economic slowdown.

This is the claim made by analyst firm Plimsoll, which has joined the long line of industry experts warning the channel that 2009 is going to be a make or break year for some players.

Plimsoll claims that a total of 284 companies are on the watch list for coming under pressure to reduce costs in line with sales. Productivity levels in the channel have risen from £208,000 per person two years ago, to just over £215,700 now. However managers need to deliver £223,000 per employee in 2009, according to the analyst.

According to Plimsoll’s figures, overall sales growth in the channel stands at 4.5 per cent, but in 2009 the market will see “very little growth”. However the market watcher claims that next year will be ‘an exciting year’ for the industry, with a number of ‘unique opportunities’ presented in the ensuing 12 months.

The analyst claims that over half of all resellers have seen a decline in sales already as the problems faced by the wider economy start to impact the channel.

In addition, a select band of 137 super profitable players delivered 15 per cent margins, but on average channel firms are achieving 2.6 per cent margins, with some still loss making, the analyst claims. However if companies take action to reduce their costs and accept their current level of business activity, 2009 could still be a profitable year, Plimsoll said.

In total, 266 of the 2105 directors working in the IT resellers market exceed retirement age, Plimsoll claims, with many having spent a lifetime in the industry. This clears the way for a number of ‘significant retirements’, driving a number of noteworthy companies to ‘consider their independence’. Plimsoll claimed 687 of the UK’s top 1,000 companies remain in private hands, but this number will shrink next year, opening the way for acquisitive companies waiting in the wings.

Despite over 160 resellers now suffering from high debts, there are 472 players that are running debt free and carrying large cash surpluses, putting them in pole position for acquisition activity.

David Pattison, senior analyst at Plimsoll said in summary: “2009 will be a very exciting year for the industry; it will be a time to choose your enemy wisely. Going on the offensive may well be the best defence.

“Key to this is the successful targeting of your weakened, low margin and heavily indebted competitors, their failure will be vital to your own company’s success.”