Light at end of channel tunnel
BDO Stoy Hayward report paints brighter picture for IT
The storm clouds of recession may soon be clearing from the IT landscape, according to a report by financial services firm BDO Stoy Hayward.
The Industry Watch report, based on quarterly Department of Trade and Industry insolvency statistics, has predicted that more than 63,000 firms in the UK will fold by 2006 - about 419 companies each week.
However, although industries such as manufacturing, travel and transport, wholesale, construction and leisure were earmarked for doom and gloom, the report predicted that the IT sector would start to see recovery in 2004, accelerating into 2005.
Industry Watch claimed that business failures in IT will be up by just three per cent in the fourth quarter of 2003, compared with, for example, 35 per cent in the transport sector.
Sukhy Kullar, an economist at BDO Stoy Hayward, said: "It is natural that the industry which entered first into recession will be the first to come out. This certainly seems to be the case with IT."
Alan Norton, head of intelligence at credit risk management firm Graydon, agreed.
"While market conditions remain challenging, many IT firms are now better placed to cope with current economic conditions. We may see a gradual recovery in 2004," he said.
Dale Vile, service director at analyst firm Quocirca, added: "A recent Quocirca survey of chief information officers across Europe revealed that they are thinking more optimistically in terms of IT spend, and there is a general increase in intentions to create more IT projects."
However, Nitin Joshi, partner at insolvency specialist PKF, said: "The convergence in the credit insurance market, reductions in distributor numbers, vendors considering a direct route to market and corporates not buying kit or upgrades all point to channel crisis, not recovery."