IT Execs' Biggest Challenges to Revival

by CXOtoday Staff    Aug 19, 2009

A recent KPMG survey of technology executives that the technology sector will recover from the current economic crisis substantially more quickly than the US economy, with senior business leaders expecting improved revenue and profitability in 2010.

About half the executives also predicted an improved job picture, according to the survey of hardware and software company executives.

Eight out of 10 executives surveyed said they expect business conditions in the technology sector to improve in 2010, with 78 percent expecting stronger revenue and 72 percent expecting improved profitability.

"The results are in line with recent earnings reports in the technology sector which suggest business conditions are starting to improve," said Gary Matuszak, partner, global chair and US leader for KPMG’s Information, Communications & Entertainment practice. "There are also reports of software industry sales expanding 5 to 10 percent annually after the recession, so while it’s far from blue skies in the industry, the worst seems to be behind us," said Matuszak.

The KPMG survey asked the executives to indicate if their strategic focus was on cost cutting or investing for long-term growth. The results show that most technology executives are focused on building the business, with 69 percent indicating they are placing emphasis on long-term growth, versus 31 percent who said they are focused on cost cutting.

On how they responded to the economic downturn in the last year, most executives said by reducing headcount (68 percent). Only 14 percent of respondents said they are planning or considering further reductions in 2010. In fact, technology executives are fairly optimistic about the industry employment picture in 2010, as 49 percent expect it to be better.

When asked to identify the top three triggers they think will spur an economic recovery, 42 percent of the technology executives cited improved business confidence, 41 percent said improved consumer confidence, and 32 percent said an improved job market. Increased consumer spending was fourth (30 percent), but was most frequently cited by the hardware technology company executives (39 percent).

The three triggers cited least frequently were effective regulation (6 percent), government stimulus spending (5 percent) and the government bailouts (4 percent).

Finding new sources of revenue (66 percent), managing costs and restoring business confidence (42 percent each), and adjusting to changing customer demand (37 percent) were the biggest challenges executives currently face in dealing with the economic downturn, the KPMG survey reported.