IT Business Confidence Index Slips in Q3

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Renewed uncertainty about global economic conditions outweighed more positive sentiments about prospects for the IT industry in the latest quarterly IT Industry Business Confidence Index from CompTIA, the non-profit association for the IT industry.

The index slipped 2.2 percentage points in third quarter, falling to 54.5 on a 100-point scale. By comparison, the second quarter reading of 56.7 was the highest index level in more than a year. The index’s six-month outlook projects a modest increase of 3.1 points.

“The unfortunate pattern of the last several years is repeating itself in 2012," said Tim Herbert, vice president of research for CompTIA. “Momentum from improving economic fundamentals and positive sentiment fails to sustain itself, stalling at midyear."

The CompTIA IT Industry Business Confidence Index is an aggregation of opinions on the U.S. economy, the IT industry and one’s company. All three components of the index fell in third quarter, with sentiment about the economy and one’s company falling slightly more than sentiment about the IT industry.

“Any bullishness about the IT industry generally and companies individually was offset by renewed uncertainty about larger economic issues, such as unemployment, stalled earnings at some bellwether companies and softening demand in many overseas markets," Herbert said.

Additionally, the data indicates a slight increase in concern among IT industry executives regarding their ability to maintain profit margins. Inevitably, economic malaise leads to greater price sensitivity and decision-making paralysis among many customer segments, according to Herbert.

Net negative sentiment increased in third quarter for all three components of the index: the U.S. economy (net negative 72 percent, up 4 points), the IT industry (39 percent, up 5 points) and one’s company (39 percent, up 7 points).

IT Firms Plan Investments, but at a Slower Pace

IT firms surveyed by CompTIA still expect to increase investments in many areas, though it’s likely that in the short-term the rate of growth will slow somewhat. For example, in the second quarter survey, 37 percent of companies indicated they planned to increase expenditures on marketing and advertising. This number fell to 29 percent in third quarter. A similar situation exists for spending increases associated with capital investments, new technology purchases, business travel and staffing.

On the hiring front, medium size firms (100 – 499 employees) are most likely to add new staff in the next six months. Overall, 32 percent of firms plan to increase staffing and 54 percent plan to remain at current levels.

“As customers seek out new technology options in cloud computing, big data, business process automation, mobility and other areas, IT firms must be vigilant in maintaining high levels of expertise through internal training, new hires or both," Herbert noted.

The CompTIA IT Industry Business Confidence Index for third quarter 2012 is based on a July 2012 online survey of IT industry executives and professionals. A total of 445 IT companies participated in the survey.

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