IT firms have plans for investing and hiring, but forward-looking expectations are tempered by concerns over stalled economic recovery.
Confidence about current and future prospects for the information technology (IT) industry was overwhelmed by anxiety over the U.S. economy in the latest CompTIA IT Industry Business Confidence Index, the quarterly business barometer published by the non-profit trade association for the IT industry.
The Q3 index fell 2.0 points to 52.9 on a 100-point scale. Though still in net positive territory, this marks the same spot for the index as in Q3 and Q4 of 2010, a sign that the nation’s economy has yet to truly break out of its funk.
“The tech sector is doing well for the most part, as demand remains relatively strong for IT hardware, software and services,” said Tim Herbert, vice president, research, CompTIA.
But the gap between confidence levels in the IT industry and the U.S. economy widened to 18 percentage points in Q3, a spread that’s five points higher than the previous quarter and the largest gap in over a year.
Looking ahead, IT executives expect the recent bout of uncertainty to abate and sales growth to resume. The CompTIA IT Industry Business Confidence Index is expected to increase 3.1 percentage points over the next two quarters, making up the ground lost during the Q3 reading. While encouraging, the ongoing economic challenges have taken their toll. In Q2, industry executives projected confidence gains of 5.2 percentage points.
“An element of fatigue has set in with regard to the overall economy and people are less confident about the future,” Herbert said. “Everyone wants to be optimistic, but the economy continues to tread water, which affects forward-looking expectations.”
Indeed, concern over a stalled economic recovery jumped significantly in the latest CompTIA survey. A full 58 percent of those surveyed for the Q3 report cited a stalled recovery as the greatest threat to business activity over the next six months. That’s up from 49 percent in Q2.
Executives also expressed concern over the potential of sagging consumer demand, which indirectly impacts business demand.
The latest index also includes some positive forecasts. For example, 87 percent of IT firms intend to increase or maintain their levels of investment in new products and business lines; and 88 percent plan to increase or maintain technology spending levels.
“IT companies must invest in new solutions, such as cloud computing, mobility technologies and workplace efficiency applications to meet the needs of tomorrow’s customers,” said Herbert.
On the employment front, 34 percent of IT companies said they intend to increase staffing over the next six months and 38 percent said they intend to maintain staffing at current levels. Medium-sized IT firms are the most likely to hire new staff.
The CompTIA IT Industry Business Confidence Index is based on the results of an online survey of IT industry executives and professionals conducted in late June and early July. A total of 449 IT companies participated in the survey. The complete report is available at no cost to CompTIA members who can access the information at www.CompTIA.org or by contacting
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