IT sector failure rates rise but large customers hold firm


IT sector failure rates rise but large customers hold firm

Simon Quicke

The number of IT firms hitting the wall rose slightly last month year-on-year as the number of insolvencies across the economy as a whole increased only slightly with large companies holding firm in the face of uncertainty.

The figures from Experian come at a time when the economy is in a vulnerable position with the Eurozone in trouble and the US getting caught up in talk of a double-dip recession.

But there were some positives in the UK business market with those outfits employing more than 500 staff saw a drop in insolvencies which was seen as a positive because it meant less smaller firms were dragged down by their failures.

But in terms of the IT market in July there were 57 firms that fell into insolvency, a 3.65% increase on the same month last year, although the percentage of the technology sector that is in trouble remained static year on year at 0.05%.

Max Firth, managing director of Experian Business Information Services, said that the need for vigilance in the channel to check the financial state of suppliers remained as necessary as ever but the news about large firms was welcome.

"When a large company becomes insolvent it can create a domino effect in the surrounding economy, so the improvement in insolvency rates with firms with more than 500 employees is good news," he said.

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