Rising profits fuel channel optimism

Stronger first quarter performance makes large companies more confident than small ones about future prospects

Many companies are more optimistic than they were last year about their long-term future following an increase in profitability in the computing services and software industry for the first quarter of 1997.

According to a survey by the Computer Software & Services Association (CSSA), large companies are most optimistic, as the channel continues to polarise. Operating profits were up 10 per cent on average.

The survey also highlighted a massive skills shortage in the channel, with an estimated 10 per cent shortfall of qualified staff. The market for recruitment services jumped by 40 per cent.

Overall, 48 per cent of CSSA members that responded to the survey were more optimistic about their business prospects than they were in the previous three months. But small companies were less optimistic and are most concerned about the IT skills shortage.

CSSA director general Rob Wirszycz said: ?There is huge competition for a limited number of staff. And small companies tend to be less attractive as employers.?

Optimism was higher among Vars than it was among other CSSA members. The survey revealed that value-added reselling was one of the areas that most exceeded expectations for the quarter from firms of all sizes.

The survey showed that the number of employees in the industry was up four per cent compared with the last quarter, but the figure exceeded the expectation of employers in the largest companies ? those with turnovers of over #100 million ? and failed to meet the needs of smaller IT companies.

The CSSA estimated that there would be a small rise in the number of employees coming into the IT industry over the next three months. This contradicted a recent CBI quarterly report which showed the number of people employed in IT was about to fall.