Spurred on by an upturn in mining investment, the Western Australian IT sector is quietly confident 2001 will be a year of growth, despite the doom and gloom surrounding the rest of the Australian channel.
With the hype surrounding the GST introduction and the Olympics last year, it has been easy to forget WA, largely influenced by the resources sector and the health of overseas markets, has been doing it tougher than other Australian states over the past couple of years. However the tide has now turned. While many companies in the channel wallow in a sluggish IT economy, WA resellers are balancing the downturn in the Australian market with great optimism about the growth of to see the resources sector .
According to Nicky Cusworth, chief economist for the Chamber of Commerce and Industry (CCI) for Western Australia, "the capital-intensive export industry seems to be dancing to a different tune to the domestically focused economy which tends to mirror the rest of Australia. Having said that, there are flow-on effects from one to the other."
In the three years up to December 2000, the WA economy has contracted. However the last two quarters have seen a recovery in mining investment and the pressure on the resource sector to improve productivity is providing a wealth of opportunities for local integration outfits.
"From our perspective, the outlook is strong," said managing director of business solutions integrator Focal Systems, Mick Cook. "We have done four deals this month which, for the Perth market, is unprecedented."
Cook believes optimism in the resources market has a huge flow-on effect, particularly in the small-to-medium business sector.
"The projects that have been approved for the North West Shelf expansion have created some additional confidence in the market. It is not total euphoria, but it is not a sustained period of doom and gloom."
Cook concedes the PC sector is finding business "no more than steady", but at the same time he says there is a lot of activity in the market. His sentiment is echoed by the managing director of IT services company DBR Group, Michael Coles.
"Along with the worldwide IT market, there has been a downturn in demand. But there are still segments bubbling along," he said, adding WA boasts its share of innovative companies developing customised applications for the mining industry.
CCI's Cusworth warns growth is still subject to the risks associated with uncertainty in the national economy and in the international environment, but she is "cautiously optimistic" the State will see reasonably strong growth through to 2002.
The health of international markets, particularly the South East Asian market, is particularly important since exports make up a large part of the WA economy.
"The export focus is a different and important one," Coles said. "Many companies are actively exporting to countries such as Singapore, Hong Kong and Malaysia. The general growth profile is to operate in the local market and in South East Asia. They may do little or no business in the Eastern states."