Results from the second ARN Business Index show Australian IT companies remain upbeat about their prospects over the short- and long-term. But many continue to paint a pessimistic economic picture for 2009.
Just over 59 per cent of respondents said economic conditions in the IT sector would deteriorate over the next 12 months, a three per cent increase in respondents taking a negative view on the inaugural December Index results.
“Getting credit for a business will be much tighter and I think that many businesses in IT are running financially tight, so I suspect mergers and closures over these times,” one respondent said.
Others indicated Australia had yet to fully feel the effects of the global economic crisis.
“The overall market will slow down in line with other industries,” another said. “As end-user customer budgets tighten, competition will increase and overall the market will rationalise.”
The view for the long term, while not as rosy as December when 80 per cent indicated they thought things would pick up over the next five years, was still strong with the majority (70.45 per cent) remaining upbeat. The general tone of comments being, “what goes up must come down, and vice versa”.
In answering questions about their own business circumstances, 68 per cent said they were in the same or a better financial position than they were a year ago (up from 65 per cent), with contractual-based business and services remaining strong.
The percentage of companies which expected to be in a better financial position this time next year jumped 15 points to 77 per cent.
“The economic climate is being impacted by sentiment and loss of confidence, fuelled by ongoing bad debt and job losses,” a respondent said. “I see that this will reach a plateau, sentiment will return and sales will increase.”
Notably, 75 per cent of companies surveyed said it was a good time to invest in their business, echoing views among industry analysts that merger and acquisition activity could pick up in the next six months.
“Strong financial management over good years means that you have the capacity to expand in a poorer market,” explained one respondent. “It is also necessary to find new avenues when the market is not as liquid. Expenditure, however, needs to be prudent and expansion needs to be in line with long term strategy”
The ARN Business Index is based on a standardised list of five questions sent to a broad cross-section of the IT industry and channel each month.
If you’d like to participate in ARN’s Business Index, please send an email to email@example.com.