Tech CFOs expect revenue growth in 2011

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Some of the tech industry's top chief financial officers (CFOs) have claimed 2011 will see a return to revenues for many of the recession-hit businesses.

More than three quarters (77 per cent) of 100 of the US’ top technology firms expected revenues to increase by an average of 10.4 per cent, according to research conducted by accounting and consulting firm BDO.

In addition, 78 per cent of CFOs claimed mergers and acquisitions would ramp up – with 23 per cent claiming it would be significantly increased compared to 2010 figures. More than two thirds (68 per cent) believed there would be more Initial Public Offering (IPO) action throughout 2011.

"With liquidity improving and revenue on the rise, technology companies are poised for a strong 2011," said Aftab Jamil, partner and national leader of the technology and life sciences practice at BDO.

"After scaling back on R&D and operational expenses during the recession, many technology companies are flush with cash and well-positioned to spend.”

Will the UK follow suit?

This is positive news for US technology companies but what about those in the UK?

Rene Millman, senior research analyst at Gartner, claimed this side of the Atlantic could expect good growth as well, but added that there are extra Government issues to contend with.

“I would expect roughly the same amount of growth in the UK for technology companies as the US, but the major factor to consider here is the cutbacks in Government spending,” he told IT PRO.

“A lot of tech companies have relied on the Government in the past for revenues that come from those big government IT projects [but] these are being scaled back so the opportunities for revenues there are not as great as in the past.”

Millman claimed rather than aiming at the large public sector organisations, technology companies in the UK were likely to change tack.

“I expect tech companies to focus more on the SMB market,” he added. “These are smaller in contract size but there would be many, many more of these and I expect companies to focus more on these markets in the future.”

Clive Longbottom, co-founder and service director of Quocirca, agreed with Millman that both the UK and Europe would see growth but said the industry must be aware this is due to an "atrocious" year in 2009.

"For the buying companies, they find themselves coming out from the knee-jerk reaction of complete technology lock-down when they realised the recession was real, then the first moves to trying to figure out what they really had to do to survive drove point projects through 2010," he told IT PRO.

"Now, they have to decide where they need to go in 2011 and beyond."

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