Survey: Despite the crisis, every second IT firm expects the same or higher revenues

14 Jul. 2009 | CzechInvest, Czech ICT Alliance | A survey by the Czech ICT Alliance and CzechInvest shows how it firms in the Czech Republic are dealing with the crisis.

Every second IT company in the Czech Republic anticipates the same or higher revenues this year
However, four out of five firms have encountered restriction, postponement or cancellation of previously agreed projects
Surprisingly, only a small number of clients are requesting completely new services, though every second firm is offering them
Eight out of ten IT companies expect the economy to recover in the middle of 2010 at the earliest
Half of all IT companies are convinced that more high-quality IT professionals are on the market in the Czech Republic

More than half of the IT firms operating in the Czech Republic expect their profits to be higher or the same as in 2008 in spite of the economic downturn. This is according to a survey conducted by CzechInvest and the Czech ICT alliance for a conference entitled “The IT Sector in the Crisis and Its Development After the Crisis”. Among other things, the project Technology Platforms for IT Services, which was partially financed with EU funding, was presented at the conference. The objective of the project is to further develop the ICT sector in the Czech Republic.

In spite of the firms’ positive outlook, the survey shows that an overwhelming majority of ICT companies have incurred restriction, postponement or complete cancellation of previously ordered projects. More precisely, due to the economic crisis 86% of IT firms have experienced the reduction of a project’s budget or its postponement until a later date; 79% have seen orders cancelled.

The anticipated impacts of the economic downturn vary from company to company. More than a quarter of firms expect roughly the same results as last year; exactly 24% expect to see growth. On the other hand, a full 47% of companies are preparing for a worsening of the situation, whereas every fifth of them expects revenues to decline by more than 20%.

However, the economic downturn is also bringing good news to ICT firms. Half of the companies surveyed concur that the labour market today offers far more available IT specialists than last year. In addition, according to three-quarters of firms, programmers’ salary requirements are now much more realistic than they were a year ago. The survey also indicates that, if firms must cut costs, they are far more willing to restrict expenditures on programmers than on salespeople.

What’s the way out?

Exactly 65% of IT companies in the Czech Republic anticipate the economy will recover in the middle of next year at the earliest. Two out of ten firms are more pessimistic and see the recession ending after 2010. Conversely, fourteen firms out of one hundred expect the economy to recover by the end of this year and two assert that the crisis is already behind us.

Most firms see investment in innovation and new products, particularly in fields where they already have experience, as the best way to weather the recession. The firms plan to offer new products mainly to their existing customers in the Czech Republic, the focus of six out of ten IT firms. However, the survey also indicates that only 30% of clients are interested in new services.

A range of companies are also planning to make greater use of European and state aid, particularly for employee educaton and for further company development. The EDUCA programme administered by CzechInvest is very popular in this regard, as the programme makes it possible to pay up to 100% of training costs with European Union funding. Sixty-five percent of firms are considering involvement in this programme. Tremendous interest is also being shown in the ICT and Business Support Services Programme, which finances the establishment of new shared-services centres, including those for software development.

Technology platform for it services – a possible solution?

The new Technolgoy Platform for IT Services is aimed at supporting further development of the IT sector in the Czech Republic far beyond the horizon of the current economic downturn. The project is being implemented under the auspices of the Czech IT Alliance in cooperation with the Czech Society for Systems Integration and several universities. The project has received CZK 5.5 million from the European Union via CzechInvest’s Technology Platforms Programme.

“IT is a key sector for the Czech Republic and its prosperous future,” emphasises Alexandra Rudyšarová, acting CEO of CzechInvest. “By some estimates, up to 200,000 people already work in information technologies here, which, by way of comparison, is more than in the automotive industry. Also, most new investments are in IT. Therefore, support for this sector, together with bio- and nanotechnologies, for example, is one of our main priorities.”

“The platform’s primary objectives are to support the further development of the IT sector in the Czech Republic, organise marketing events abroad focused on generation of new projects to be implemented in the Czech Republic, and to support Czech firms in foreign markets,” says Michal Zálešák, COO of the Czech ICT Alliance and guarantor of the Technology Platform project. “Support for the platform is related to the aid previously received for foreign promotion and it is only a foundation for further projects.”

“The Technology Platform for IT Services plans to promote cooperation between private companies and universities, improve education in the sector and to attract investment from abroad. In essence, it has the same objectives as Czechinvest, and therefore we are taking part in the project,” adds Jan Fried, specialist for the IT and software-development sector, CzechInvest.

The survey shows that IT firms in the Czech Republic expect from the Technology Platform primarily support for education, including popularisation of the sector and practical experience for students. Other important aspects are the creation of joint business opportunities and development of business contacts abroad. The Technology Platform will formulate its plans for the coming years based on the specific requirements of IT firms.

Anticipated revenues

When will the economic downturn end?

About the survey:

The survey was conducted during the conference “The IT Sector in the Crisis and Its Development After the Crisis”, held on 16 June and organised by CzechInvest and the Czech ICT Alliance. The survey respondents were fifty ICT companies from the Czech Republic representING small, medium-sized and large enterprises with Czech and foreign owners.