Recession bites for Irish tech firms as companies delay investments

IRISH TECHNOLOGY firms are turning to new markets and concentrating on product innovation to overcome the weakness in domestic markets, as the full impact of the recession is finally hitting home, according to a new survey.

The annual Technology Sector Survey, from business advisory firm BDO, found companies within the sector have significantly lower growth expectations than last year.

BDO’s head of technology sector team Teresa Morahan said that although the firms had adapted to the tougher economic climate, they were now feeling the knock-on effect of the recession. “The view was a lot of tech firms had felt the impact of previous downturns, especially around the dotcom bubble, and adapted quicker,” she said. “They were quick to react in cutting costs etc when they saw the downturn happening.”

However, with more firms cutting back or delaying capital expenditure technology, companies are starting to be affected. Fewer than half the firms surveyed said they expected revenue growth to be above 5 per cent in the next 12 months, compared with 82 per cent in 2011. The survey was carried out by BDO and the UCD Michael Smurfit Graduate Business School, with 100 technology, media and telecoms companies north and south of the Border taking part.

The survey, which will be launched at an event in Dublin next Tuesday, also found there had been a significant rise in the number of firms who were expecting business to worsen and record negative revenue growth for the year, with 16 per cent saying their revenues would fall compared with 5 per cent last year.

Most of these firms blamed the state of the economy for the expected decline, with 62 per cent citing the downturn, compared with 9 per cent a year ago.