Annual TMT Survey: Staying smart in a downturn

The latest annual Technology, Media and Telecoms (TMT) research project, which examines the risks and opportunities of the downturn in the TMT sector as identified innovation as the top growth strategy.

Earlier this year BDO commissioned CFO Europe Research Services (part of the Economist Group), to conduct a TMT research project asking senior finance executives to assess their future growth strategies and reveal the impact of the current economic downturn.

Undoubtedly, the economic downturn has had an impact on the TMT sector – many more businesses are forecasting a decline in revenues in 2009 when compared to last year’s survey.  However, there is still a healthy level of optimism in the sector and strong growth is predicated for the medium term.

From acquisition to innovation

Interestingly, when compared to last year’s survey results, there has been a significant change in how TMT businesses plan to grow.   Last year, growth was all about acquisition, but a year on innovation is the preferred route. 31% say innovation is their top strategy for growth this year, compared with a mere 5% a year ago.   Encouragingly, whilst there are planned cuts in many areas of expenditure, 80% of respondents don’t plan to cut their investment in R&D.  The survey also points to an increase in strategic partnerships, with more businesses willing to collaborate in order to succeed.

However, the number of TMT businesses that feel they have access to the funding they need to operate effectively has fallen dramatically.  30% of respondents report finding it difficult to access funds - this compares unfavourably with last year, when only 13% said it was difficult.  As the economic environment remains tough over the coming months, the tension between the need to maintain R&D expenditure and the lack of external funding will become increasingly critical.

Slim growth this year, but three-year targets remain unchanged

TMT CFOs are less optimistic about growth rates this year - 40% of CFOs forecast 0-5% growth in the coming year, whilst 16% forecast negative growth (compared to 2% last year).   However, the three-year outlook is more positive and growth projections are broadly in line with those set out in last year’s survey – just over a quarter of respondents forecasting growth of over 20%.  The confidence in longer term growth reflects a belief that innovation strategies and R&D spending will succeed in driving revenues in 2010 and beyond.

To hear how the recession has impacted the TMT sector, why TMT companies are concentrating on innovation and what the credit crunch has told us about banking relationships please go to our UK TMT: Staying smart in a downturn (vodcast)

Please feel free to download our full report or to request a hard copy please contact: Claire Jones, TMT, Business Development and Marketing Manager.