IT dealers bear brunt of slowdown, says report


IT dealers bear brunt of slowdown, says report

Microscope contributor

Business rescue and restructuring consultants Begbies Traynor have singled out the IT sector as one of the verticals most severely affected in Q3 by the gathering economic storm.

The firm released numbers today that suggest the sector has seen a 627% year-on-year increase in firms suffering from ‘critical’ difficulties.

Analysts defined critical difficulties as firms with outstanding CCJs worth over £5,000 or winding-up petition actions. Out of 4,566 businesses in such a situation, IT firms accounted for 160, up from just 22 in Q3 ’07.

Across the UK, only hire and rental services performed worse, with manufacturing and property also big losers. Begbies Traynor added that firms with significant problems also doubled from January to the end of last month.

Begbies Traynor partner Nick Hood said: “The effects of recent market volatility and ongoing credit crunch conditions suggest that businesses are reducing IT spend and deferring or canceling new IT projects.”

Hood predicted the sudden rise would have knock-on effects in the industry, adding: “There’s evidence of many IT companies being in denial and being slow to take cost-cutting action. This shores up problems for the future and may make them more vulnerable to acquisition by larger, more established players.”

In cheering news for some IT execs, Begbies Traynor also revealed that the nation’s estate agents were also suffering, with 392 businesses reporting critical problems, up from 56 this time last year.

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