Integro Accounting embarked on a piece of research covering a wide range of issues including staffing shortages, sales volumes and inflationary pressures to name a few.
Confidence has steadily grown over the last three year from 76% in 2020 to 89% in 2023 with respondents reporting that they are highly confident that their business will survive the next three months. Not only is there a belief that businesses will survive, but only 2% thought performance would decrease, and over half are positive, believing performance would increase in 2023. The really interesting part of that data is that it contrasts with other sectors in the economy, the only exception being veterinarians who are also optimistic, although not to the same extent as IT consultancy.
This is heart-warming research for IT consultancies as they struggled during the pandemic but have emerged stronger than many other businesses. What’s more, the talent shortage that once existed in this sector has improved by 5% in the last two years.
“Valuations and amounts raised by UK tech businesses reached record levels last year and the early signs are that 2023 could be even better” said Christian Hickmott, Managing Director at Integro. “Covid-19 policy accelerated market shifts that have outlasted the pandemic, which has been to the benefit of much of the UK’s tech sector but to the detriment of other sectors in the economy.”
As most businesses continue to invest in digital transformation, this provides a boost for the demand in tech skills across the board. And as remote working is becoming more and more the norm, the need for the associated technology is also increased and shall remain so for some time to come.
The effect on profit margins
The research by Integro also found evidence that IT businesses are having to absorb costs bought about by rising inflation rather than passing them on to clients. This obviously eats into profit margins but the sector is aware that other businesses are faring worse, hence their reluctance to pass rising costs on. In fact, only 17% have chosen to pass them on while 43% have absorbed them. Christian Hickmott commented “Strong demand for software and IT services puts tech businesses in a relatively stronger position when negotiating price increases with customers.”
