Accountants Stoy Hayward have completed a survey of technology, media and telecommunications (TMT) companies which shows that, besides lay-offs, there are seven measures they have taken to cope with the recession.
These are:
- Re-negotiating with suppliers
- Reducing research and development
- Merging/acquiring competitors
- Putting more emphasis on closing new contracts
- Focusing on sales productivity
- Closure of non-productive business segments
- Outsourcing of core functions
“TMT has undoubtedly felt the impact of the economic downturn and the resulting slowdown in technology spending”, said Julian Frost, head of TMT at Stoy Hayward.
“However, companies in this sector have worked hard to introduce a number of cost cutting measures in order to reduce overheads across the full range of business functions. Although confidence levels have declined, the fall has been less severe than might have been expected and companies now appear to be looking to the medium and long-term future with a reasonable degree of optimism,” said Frost.
When asked how confident TMT companies are over economic prospects in the next quarter, nearly 30% of respondents said they were “slightly or more confident” about economic prospects facing the sector over the next quarter, with 38% saying they were “as confident” as in the previous quarter.
The remainder, 32%, were “slightly less confident” or “much less confident.”
Just over 42% of respondents said their biggest risk factor was projects being deferred, followed by 30% of respondents whose biggest worry was falling customer demand.
Other chief concerns included customers defaulting on payments and asking to have credit terms extended; price cutting from competitors; lack of availability of credit and the cost of borrowing; talent retention; and public sector cutbacks.
See also: Distribution orders picking up, according to survey
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