IT Industry Confidence Slips in Q2 but Executives Still Expect Improved Business Climate

IT industry confidence slipped in Q2 2011, influenced by the earthquake and tsunami in Japan, unrest in the Middle East and rising oil prices, yet executives still expect the uncertainty to ebb and sales growth to continue, according to CompTIA's IT Industry Business Confidence Index.

CompTIA said that its Index fell 5.1 percentage points to 54.9 on a 100-point scale but the IT industry believes it can make up the loss over the next two quarters, officials said. Indeed, this latest recording bests the IT industry's confidence levels for nearly all of 2010, CompTIA said.

The Index is comprised of IT executives' input on the U.S. economy, the IT industry and their own companies. Those surveyed expect, on average, that their businesses will grow about 13 percent in 2011, CompTIA said.

"Confidence levels about the industry as a whole and about individual companies continue to reflect optimism in a strengthening economy," said Tim Herbert, CompTIA research vice president.  "The net positive for the industry now stands at 62 percent, and for individual companies at 64 percent," he said. "Not long ago both figures were closer to 50 percent."

Herbert said that a number of positive signs have emerged, including a two percent uptick in businesses willing to hire in the second quarter, a narrowing of the performance of the U.S. economy compared to the IT industry, and a boost in the outlook of small IT businesses.

"Hiring is a good indicator of confidence and positive economic momentum," Herbert said. "Only firms with solid business prospects are willing and able to expand their headcount."

Herbert said that while the economic component of the Index is still pulling down its overall score, that trend may be reversing. 

"The gap between the performance of the overall economy and IT industry appears to be closing slightly, which should be viewed positively by IT industry executives," he said.

The confidence level of IT businesses generating less than $1 million annually also has begun to climb, according to Herbert. Smaller organizations, for as long as CompTIA has compiled the Index, have trailed medium-sized and large businesses in confidence.

But Herbert said that "this difference has narrowed," an indication that the "recovery has boosted prospects for businesses of all sizes." 

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