Thriving tech sector 'can lift Scots economy'

Published on Sunday 5 April 2009 21:41

SCOTLAND'S information and communications technology (ICT) industry is "cautiously optimistic" about the outlook for the year ahead, according to a survey of the sector published today.

The technology industry annual "barometer" – compiled by trade body ScotlandIS – found that 61 per cent of respondents expect their company to grow this year.

While work in the financial sector is declining, ICT firms said they expect to do more business with law and accountancy firms, energy and utility companies and public sector bodies.

IT firms expect to be replacing ageing computer and telephone equipment and installing more energy-efficient machines, to save businesses money during the recession.

ScotlandIS said that 72 per cent of those firms surveyed reported a rise in turnover during 2008, with the trade body estimating that the sector could generate an additional 2.8 billion of gross value added (GVA) to Scotland's economy over the next five to seven years.

Polly Purvis, executive director of ScotlandIS said: "While the Scottish market is clearly not immune to overall market conditions, the industry does seem relatively well positioned.

"If nurtured properly, this sector could have a massive impact on Scotland's long-term economy. The continued adoption and exploitation of ICT could generate an additional 2.8bn of GVA to Scotland's economy over the next five to seven years.

"Fully exploiting technology is the single most powerful lever we can employ to achieve wholesale productivity gains right across the economy."

Small and medium-sized enterprises (with less than 35 staff) are expected to grow the most in the year ahead, according to ScotlandIS.

Cash flow was causing problems for some firms though, with 42 per cent of companies reporting difficulties with financing, with banks amending their lending terms and customers delaying payment.

Industry leaders expressed concern that ICT companies were, "worryingly", not looking to recruit either senior managers or graduates in the year ahead. While last year 81 per cent of respondents expected the increase staff numbers, the figure has almost halved this year to only 46 per cent.

Demand was highest for skills in sales and marketing and in software and web development positions.

Wendy McDougall, of 9-20 recruitment, which helped to compile the survey, said: "Companies are increasingly cutting out senior managers and consultants, which could be a risky strategy.

"This, coupled with the fact that hundreds of newly qualified graduates will be hitting the market in the summer, means the main challenge is how to retain this talent in Scotland."

She said that the effects of the recession on the ICT sector appeared to be far less than some industry leaders had at first feared.

McDougall added: "For those companies currently recruiting, the good news is that there is a wealth of 'not normally available' talent now looking for work."

While respondents were optimistic about their financial outlook, ScotlandIS said companies were adopting a "belt and braces" approach, by scrutinising their overheads and imposing "stringent" financial controls.

Half of firms said they were cutting back on travel costs, with many companies looking to video and teleconferencing.

CASE STUDY

CASTLE Computer Services, a Bellshill-based information technology (IT) company, has reported a "surge" in demand for its business.

The firm recently helped Edinburgh Solicitors Property Centre (ESPC) to save 35,000 a year in energy costs by installing new computer servers. Castle cut the number of servers used by EPSC from 49 to just 14. The energy saving also helped to cut ESPC's "carbon footprint" by requiring less power, the equivalent to taking 35 cars off the road, Castle said.

Andrew Cruickshank, a technical sales manager at Castle, said: "ESPC will have paid back their investment within 18 months. Not only that, they have been able to free up parts of the office used as a data centre."