IT Execs Confidence in Economy is Flagging

The IT industrys business confidence fell in the latest quarter as the economy faltered, according to new CompTIA research.

The third-quarter index dropped two points to 52.9, based on a 100-point scale, CompTIA found in its most recent IT Industry Business Confidence Index. That number still falls in positive territory, but the index stayed at 52.9 in the third and fourth quarter of 2010, a sign that the nations economy has yet to truly break out of its funk, CompTIA said.

Nonetheless, the tech sector is doing well for the most part, as demand remains relatively strong for IT hardware, software and services,” said Tim Herbert, CompTIAs vice president of research.

Even so, IT executives confidence in the economy is flagging, and it shows in their responses to the Business Confidence Index. The gap between confidence levels in the IT industry and the U.S. economy widened to 18 percentage points in third quarter, a spread that’s five points higher than the previous quarter and the largest gap in more than a year, CompTIA said.

“An element of fatigue has set in with regard to the overall economy and people are less confident about the future,” Herbert said. “Everyone wants to be optimistic, but the economy continues to tread water, which affects forward-looking expectations.”

Indeed, concern over a stalled economic recovery jumped significantly in the latest CompTIA survey. A full 58 percent of respondents cited a fizzling recovery as the greatest threat to business activity over the next six months. That’s up from 49 percent in the second quarter. Executives also expressed fears over potentially sagging consumer demand, which holds an indirect impact on business demand.

And yet, the latest index also comes with some positive forecasts. For example, 87 percent of IT firms intend to increase or maintain their levels of investment in new products and business lines; and 88 percent plan to increase or maintain technology spending levels.

“IT companies must invest in new solutions, such as cloud computing, mobility technologies and workplace efficiency applications to meet the needs of tomorrow’s customers,” said Herbert.

On the employment front, 34 percent of IT companies said they intend to increase staffing over the next six months and 38 percent said they intend to maintain staffing at current levels. Medium-sized IT firms are the most likely to hire new staff.

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