Despite the breadth and severity of the global economic downturn, technology executives increasingly believe the worst is behind us. In a KPMG survey of 130 technology CEOs and other senior executives, industry leaders said they expect the sector to improve over the next year, and to outpace the broader U.S. economic recovery.
In the survey, nearly 80 percent of respondents expect higher revenue and profitability in 2010, and two-thirds said the industry would recover from the downturn ahead of the overall U.S. economy.
In fact, many technology leaders are looking past the downturn and planning for improved business conditions. Nearly 70 percent say their strategic focus has turned to long-term growth, versus only 31 percent who say they are concentrating primarily on cost-cutting.
Why are technology leaders so confident? One reason is that companies in many segments, such as semiconductors and component manufacturers, are at the front of the global supply chain, and expect to feel the recovery much sooner. Recent earnings reports and quarterly outlooks suggest that this part of the recovery cycle may already be underway. Also, corporate spending on IT is a key investment area for companies across all industries as corporate leadership continues to look for ways to streamline their organizations and use leading edge IT solutions such as Cloud Computing to emerge from the current downturn poised for growth.
On the consumer side, demand for high-tech communications and entertainment products and services has remained strong, both in mature and emerging markets. As the availability of wireless data, content and services expands globally, people recognize the value of nearly ubiquitous data access and digital convergence.
However, despite their optimism about the next year, the senior executives in this survey recognize there are still challenges ahead. In our survey, two-thirds of the leaders say their biggest challenge will be finding new sources of revenue. Similarly, 42 percent cited managing costs and restoring business confidence, while 37 percent cited responding to changing consumer demand.
About half of the respondents in our survey thought the employment picture in technology would be better a year from now and another 40% think it will have at least stabilized. Employment gains at tech companies are also expected to lag the overall recovery as companies look for signs of sustained growth before adding headcount.
Despite these challenges, technology leaders can point to the industry’s half-century track record of helping companies of all sizes improve productivity and create new markets. As companies reach the limits of achieving measurable benefits from cost-cutting, they will again turn to IT and the technology sector for help in transforming their businesses.