Tech Companies Are Full of Worry in 2010
Companies are overwhelmingly concerned about economic conditions in 2010. This concern has them worried about a rash of business issues including whether they will be gobbled up by competition, whether new products and services will be able to launch and be marketed, and whether they can keep their best employees.Tech companies have anxiety this year; some might call it agita. There are always risks in business. Yet, when 75 percent of the largest technology companies are not sure they will fulfill their corporate strategy this year, it's easy to understand 2010 as a bumpy and tenuous year for IT budgets, jobs, the economy and company confidence. There is a whole lot more "wait and see" attitude than surefire positive reinforcement.
As one IT research executive, Frank Scavo of Computer Economics, recently told eWEEK, "It seems the mood has shifted from cautious optimism to hopeful pessimism."
According to a May 13 report from professional services company BDO Seidman that aggregates and analyzes risk factors from the 10-K filings of the 100 largest U.S. technology companies, 83 percent are worried about retaining their best employees.
But topping the concerns is a two-way tie between competition and consolidation (94 percent) and "failure to develop or market new products/services" (94 percent). Right behind these two are economic conditions (93 percent), regulations and taxes (88 percent) and management of mergers, acquisitions and divestitures (86 percent).
"There is always competition and consolidation in the tech sector, but because of the economic turbulence in the last two years, its effects can be particularly severe for tech businesses," said Aftab Jamil, leader of the Technology Practice at BDO, in a statement. "They lost valuable employees due to downsizing; as the economy stabilizes, companies need to regain key personnel to serve the resurgence and jumpstart innovation."
Nearly half of companies are seriously worried over issues in labor. Labor concerns have jumped this year to 49 percent from 22 percent in 2009 to 49 percent. With 83 percent worried about risks in international operations and 75 percent concerned over foreign suppliers and vendors, 2010 is shaping up to be a year of severe risk management.
But it does not stop there. Technology companies have legal headaches too. From the report:
"Technology companies are anticipating more litigation risks this year (80 percent in comparison to 68 percent in 2009). This could be an indication that companies are preparing, and in a better position, to pursue legal action for IP infringement and breach issues."
One of the largest gainers in this year's report is the huge concern of fulfilling corporate strategy. Nearly 70 percent of publicly traded technology companies are worried about this issue. By contrast, only 27 percent were worried about it last year.
"Companies increasingly view that they either need to strategically adopt or risk ceding their business to others," said Jamil. "This makes for lots of opportunity, including for smaller businesses."