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November 25, 2009

SMEs see no quick end to recession

IT firms prepared for another tough year

By Vinod

SME technology companies anticipate another tough year ahead, despite believing that the worst of the recession is over, according to Clifton Asset Management (CAM).

CAM’s quarterly survey of 1,000 SMEs in the IT industry found that 28% had cut jobs in the last six months, compared to 34% the previous quarter. Similarly, 10% fewer owner-managers said they would need to reduce payroll than in CAM’s spring survey and almost one in four said their business had improved.

Even though these findings suggest that the peak of the recession is past, more than half the respondents believed the economy would flatline for at least another 12 months. Owners in the South East were the most optimistic about recovery, while those in the West Midlands were most pessimistic.

“Most IT companies are still hurting from the recession. This is because most of them have a business model where they require people to make large capital investments in software and hardware. The reality is that most businesses, especially SMEs, don’t have the cash to do this. Most are still finding it hard to get finance and there is no sign of this changing,” said Rob Lovell, CEO of ThinkGrid, a cloud provider for SMEs

A third of the firms were unaware that they could get help from the Enterprise Finance Guarantee, a government scheme aimed at stimulating bank lending to SMEs. CAM pointed out that so far, only around 2% of firms who have applied for funding have been successful.


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