Brit tech sector upswing gets into gear, says KPMG, Markit report

The latest edition of KPMG and Markit’s Tech Monitor UK report suggests the IT industry is growing at its fastest pace since February of 2004

Business activity in the UK technology sector expanded at a greater rate than at any point in the past decade, according to the latest quarterly Tech Monitor report from KPMG and Markit.

The report found that following a cyclical upswing in early 2013, the industry ended the year on a much firmer growth footing, with December’s Tech PMI (Purchasing Manager’s Index) Business Activity comfortably above the 50 ‘no change’ baseline at 61, showing a sixteenth consecutive month of growth.

The index last moved above 60 points back in February 2004, and hit a low point of 40 in early 2009.

The report also revealed solid profitability in the industry, and job creation rates were maintained, with 44% of firm’s planning to hire more staff in 2014, with many concentrated in known tech hotspots around Cambridge. Additionally, around twice as many firms, 27%, planned to increase CAPEX this year as those expecting a reduction.

“UK tech companies are also more confident about the business outlook than firms in other industry sectors, with growth expectations at tech companies well above UK private sector average, underlining the impact the sector has on the country’s economic performance and the important role tech companies play in the burgeoning recovery,” commented KMPG Technology head, Tudor Aw.

“Our report also shows that contrary to the popular belief that the UK lags behind the US tech sector, as trends in UK tech business activity closely match the performance of the Nasdaq. These results show that we can be very proud of our tech companies and the strength of the sector in the UK.,” he said.

Markit senior economist Tim Moore hailed the IT sector’s positive contribution to recent falls in unemployment and said the industry had now established itself as a key growth engine within the UK economy and would continue to play a major role in boosting GDP and helping bring down the unemployment stats.

Chris Papa, managing director of cloud services provider Qubic, said the industry would undoubtedly see a surge in interest for IT services – particularly among SMEs – as the economy picked up.

He argued that the industry could go further and reach those that were not planning to increase CAPEX by continuing to push the benefits of hosting.

“We recognise that tying-up capital by investing in hardware and software is particularly difficult for businesses that have been hurt by the decline of the UK’s economy,” said Papa.

“We can remove the need for large, upfront costs traditionally associated with investment in IT. A hosted solution can help companies build their confidence and help them to expand”

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