Mid-sized UK IT companies invest in growth

Mid-sized IT companies in the UK grew faster than the average and plan to increase spending on R&D by more than any other sector

Medium-sized IT companies in the UK will grow faster than the average this year, and plan to increase spending on research and development (R&D) by more than any other sector, according to research.

The GE Capital report, done alongside The Warwick Business School, surveyed mid-sized companies across all sectors in Europe, including 91 UK IT companies.

It revealed that medium-sized IT companies in the UK are expected to grow by 2.5% in 2013, compared with the cross-sector mid-market average of 2.3%. To keep pace, mid-sized UK IT companies will increase their capital investments by 6.2%, which is the highest of any sector.

These firms are also increasing R&D investments by more than any other sector, with 8.8% of an overall €13m rise in spending this year. Over a third (36%) will increase what they spend on innovation and new product development, a total of 39% plan to increase their sales and marketing spend, and 33% will increase investment in systems and business processes to boost productivity.

Mid-sized UK firms across all sectors are confident about the next 12 months, predicting 2.1% growth – compared with 1.7% in Germany, 1.4% in France and 0.5% in Italy. 

Confidence in future growth is reflected in strong investment plans. On average, 87% of UK mid-market firms are planning to either increase investment or maintain investment at existing levels over the next year.

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The report surveyed more than 2,000 senior executives in companies across the UK, France, Germany and Italy. The sample included around 600 companies in the UK.

“We’ve been banging the drum for medium-sized businesses and the important role this forgotten army will play in the UK’s economic recovery,” said John Cridland, CBI director-general. “Though small in numbers, these firms are big on impact, punching well above their weight in terms of revenue contribution and job creation.

"To maximise their growth potential the government must ensure they can access the skills they need, by giving employers more control over the design and funding of apprenticeships and improving access to export support schemes so they can tap into fast-growing overseas markets. This report is a timely reminder of the importance of medium-sized businesses to the UK economy.”

Mid-sized IT supplier Hospedia, which supplies hospitals with multi-function bedside terminals is experiencing double digit sales growth. The company has innovated around bedside terminals that were previously used as entertainment systems. Today Hospedia has transformed them into multifunction terminals that can even be used by doctors to access clinical data. It has 150 hospital customers and provides services to about 70,000 patients.

Tim Weil, CEO at Hospedia, said the company is now expanding internationally.

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