The CompTIA IT Industry Business Confidence Index held steady from Q2 to Q3, but a look at numbers over a wider timeframe shows IT companies are growing in optimism. The index, calculated this quarter from results of an online survey of 308 IT businesses, is 57.9 on a 100-point scale. The index was 58.0 in Q2. The current number, modestly above average, is about 10 points higher than Q3 ’09.
So, what does this really mean? Tim Herbert, CompTIA VP for research and market intelligence who originated the index, says, “We have had growth. That’s a story I try to remind people. A lot of sectors in the U.S. economy are down or flat. We have had growth over the past five years.”
Herbert says although IT firms usually watch business trends, the aggregate survey of business sentiment provides a picture of the entire industry that individual firms might not otherwise have.
Companies that respond to the survey for the index, produced by CompTIA at the beginning of each quarter, report their confidence in three areas: the overall U.S. economy, the overall IT industry, and the respondent’s own company. Among the three areas, confidence in the U.S. economy is lowest, at 48.3. Confidence in the overall IT industry is 62.0, and confidence in the respondents’ own companies is 62.7. “While the ratings for the IT industry have held up well, the index’s economy component continues to be hampered by stubbornly high unemployment, softness in certain industry sectors, overseas volatility, and the unknown effects of Federal Reserve monetary policy,” says Herbert.
The survey also asks respondents to look ahead to the next six months. The forward-looking component of the index projects a gain of 2.7 percentage points over the next two quarters. Herbert says people are generally optimistic when they consider the future, but the increase could indicate scheduled projects or prospective business.
The smallest IT firms surveyed — fewer than 10 employees — were the most concerned about their businesses, with 40 percent saying they were lagging behind goals and only 17 percent saying they were ahead of where they planned to be mid-2013. Overall, 23 percent of IT firms are tracking revenue ahead of goals for 2013. The survey shows IT companies see opportunities, with 39 percent planning some investment in the next six months in new products, business lines, or to staff technical positions.
The survey also asks about perceived threats and concerns over the next six months, with 48 percent stating “price sensitive customers hesitant to spend” is their biggest concern. “CompTIA research consistently shows strong demand in many areas of IT hardware, software, and services, so customer interest is there, but the confidence to make the investment may not always follow,” Herbert explains.
Herbert adds one value of the survey is reinforcing the importance of how to approach customers. “Solutions providers really need to be sure they are providing solid ROI data and to connect IT investment and improving a customer’s bottom line,” says Herbert.