IT does best as UK economy brightens up
Negative company warnings decreasing in IT and telecoms sectors
The IT and telecoms sectors are the stars of the UK economy, with the number of negative company warnings in these sectors decreasing by a whopping 60 per cent last year from 2003.
Figures compiled by Mandis Information Services on behalf of KPMG Restructuring revealed that overall UK negative corporate announcements, such as profit warnings, redundancies and restructuring, for the fourth quarter 2004 decreased by 14 per cent.
This equates to 1,154 warnings in 2004, compared with 1,339 in 2003. In the IT and telecoms sector, warnings fell from 52 in 2003 to just 21 last year.
Paul Gresham, UK head of software and services at KPMG, told CRN: ?After the year 2000, the bubble burst and firms stopped investing heavily in IT projects. Most software and services firms suffered because customers weren?t spending money.
?More recently the world economy has improved, and people who have not invested in IT for two or three years are beginning to spend again.?
Other sectors in the UK showed less positive signs of recovery, according to KPMG. Construction showed a 46 per cent increase in warnings, and the retail sector, including online sales, saw an rise of 46 per cent.
Alan Norton, head of intelligence at Graydon, agreed the outlook was fairly positive for the IT sector.
?With the decline in the number of companies failing and insolvencies on a downward trend, the picture is certainly brighter than it was a year ago. It is not a runaway recovery but things are definitely picking up. The stock market is growing again and the UK economy is doing well compared with Europe. There will be further consolidation in the channel as expected,? he said.
However Gresham warned that the outlook is not entirely rosy. ?UK firms will continue to look at cost savings, especially at outsourcing jobs to eastern Europe and China,? he said.