Looking ahead, IT industry executives expect the recent bout of uncertainty to abate and sales growth to resume. The CompTIA IT Industry Business Confidence Index is projected to increase 5.2 percentage points over the next two quarters, making up the ground lost in the Q2 reading.
Despite the Q2 dip, IT industry sentiment is still on solid footing. The latest reading exceeds confidence levels for most of 2010.
“Confidence levels about the industry as a whole and about individual companies continue to reflect optimism in a strengthening economy,” said Tim Herbert, vice president, research, CompTIA. “The net positive for the industry now stands at 62 percent, and for individual companies at 64 percent. Not long ago both figures were closer to 50 percent.”
Another positive sign – hiring intent continues to move upward, increasing 2 percentage points to a Q2 rating of 42 percent.
“Hiring is a good indicator of confidence and positive economic momentum,” Herbert said. “Only firms with solid business prospects are willing and able to expand their headcount.”
The CompTIA IT Industry Business Confidence Index is comprised of three metrics: opinions of the U.S. economy, opinions of the IT industry and opinions of one’s company. While the economy component of the Index continues to drag on the overall reading, that trend may be turning around, according to Herbert.
“The gap between the performance of the overall economy and IT industry appears to be closing slightly, which should be viewed positively by IT industry executives,” he said.
Another gap in index results that’s narrowing is the confidence level of small IT businesses compared to their larger counterparts. Throughout the history of the Index, the smallest IT firms (under $1 million in annual revenue) lagged behind medium-sized and larger firms in business confidence.
“This difference has narrowed, however, a sign that the recovery has boosted prospects for businesses of all sizes,” Herbert said.
Among all firms surveyed, the average revenue growth rate expectation for 2011 is 13 percent. The majority of companies will stay in their comfort zone to achieve that goal. Roughly three-fourths will turn to existing customers or new customers within the same vertical market for growth. A minority of firms (20 percent) plan to seek out growth in new vertical markets.
Expenditures by IT firms in many categories will increase or hold steady. Compared to the Q1 Index, some firms will slow the rate of increases in investments in new technology, new business lines and marketing/advertising initiatives.
“This may be a situation where firms committed to the expenditures during Q1 and are now at the point of execution or waiting to see the return on investment,” said Herbert.
On the challenges to growth front, IT industry executives voiced concern over the impact of new, unexpected shocks to the economy. This rating increased 9 percentage points from Q1, rising to a concern rate of 41 percent. Offsetting this negative, a number of other concerns subsided, including weak consumer demand, government regulation, competition from international firms and labor prices and availability.
