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According to a survey by Deloitte & Touche in the US, CEOs of fast-growing technology companies are splurging on new employees and marketing strategies.
"Despite a radically changed technology marketplace, the majority of CEOs of North America's fastest-growing technology companies are optimistic about the future of their companies and the technology industry," said Mark Evans, managing director of Deloitte & Touche's technology, media & telecommunications group based in San Jose. "And, they're putting their money where their mouths are by investing in marketing and sales activities, hiring new employees and looking toward strategies that will help contribute to their continued growth, while shaving travel and administrative costs."
In fact sixty-two percent the top executives of the 2001 Deloitte & Touche Technology Fast 500 listed companies are "very" or "extremely" confident in the tech sector. These same executives say that they expect to maintain the high levels of growth they have experienced over the past five years.
Deloitte &Touche puts this into perspective by pointing out that Fast 500 companies had revenue growth rates over five years (1996-2000) that ranged from 824 to 115,874 percent.
"Innovation doesn't suddenly stop just because the business climate goes cold. It simply takes longer for it to surface, spawn new thinking and new business ventures," said Scott Jarus, president of J2 Global Communications Inc., which provides outsourced value-added messaging and communications services. Publicly quoted J2 ranked Number 50 on the 2001 Fast 500.
Twenty-one percent of CEOs surveyed by Deloitte & Touche said they are "somewhat" confident about maintaining their five-year growth rates, while only 10 percent indicated that they are "not very confident" or "pessimistic." More significantly however, nearly 90 percent of CEOs plan to hire new employees.
However, it is not quite a return to the heyday of 1998, because the survey revealed that 49 percent of the 500 firms anticipate adding fewer than 25 new employees. Twenty percent plan to add 26 to 49 new workers; and 12 percent expect to hire 49 to 100 new employees. A mere six percent have plans to add 101 to 200 new employees, and only two percent plan to hire more than 200 employees.
More than 25 percent of the chief executives said investments in marketing and sales are the way to stay competitive and maintain growth rates. In fact, for the first time since the survey's inception in 1998, "finding and hiring employees" falls to the second biggest challenge, with "developing strong marketing strategies" now the biggest challenge for 30 percent of firms involved in the survey. "Finding and hiring employees" was the biggest challenge for just 24 percent of the respondents, down from 39 percent in 2001 and 55 percent in 2000.
Only 16 percent indicated that "raising capital" was their biggest challenge. However, 34 percent of the CEOs said their biggest personal challenge is "achieving and sustaining profitability," followed by "developing leaders and delegating responsibility" for 24 percent of the respondents.
The positive news from these 500 companies is tempered by the fact that administrative costs, particularly travel costs, have been curtailed to reduce overhead with 27 percent of the executives surveyed claiming that they are cutting general and administrative costs.
Even more are resisting the urge to make acquisitions, with only 12 percent planning to buy other companies and fewer still have plans to be purchased (six percent). Just six percent will merge and only three percent have plans to go public.
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