Business rescue and restructuring consultants BegbiesTraynor have singled out the IT sector as one of the verticals most severelyaffected in Q3 by the gathering economic storm.
The firm released numbers today that suggest the sector has seena 627% year-on-year increase in firms suffering from ‘critical’ difficulties.
Analysts defined critical difficulties as firms withoutstanding CCJs worth over £5,000 or winding-up petition actions. Out of 4,566businesses in such a situation, IT firms accounted for 160, up from just 22 inQ3 ’07.
Across the UK,only hire and rental services performed worse, with manufacturing and propertyalso big losers. Begbies Traynor added that firms with significant problemsalso doubled from January to the end of last month.
Begbies Traynor partner Nick Hood said: “The effects ofrecent market volatility and ongoing credit crunch conditions suggest thatbusinesses are reducing IT spend and deferring or cancelling new IT projects.”
Hood predicted the sudden rise would have knock-on effectsin the industry, adding: “There’s evidence of many IT companies being in denialand being slow to take cost-cutting action. This shores up problems for thefuture and may make them more vulnerable to acquisition by larger, moreestablished players.”
In cheering news for some IT execs, Begbies Traynor alsorevealed that the nation’s estate agents were also suffering, with 392businesses reporting critical problems, up from 56 this time last year.