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Top execs say the IT sector is improving
Tuesday, May 21 2002
by Matthew Clark


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.