The European Technology Index from DLA Piper surveyed the financial outlook of European tech firms, and found that the main benefits of M&A cited by respondents included access to new technology (51%), establishing a faster presence (45%), and prevention from competitors acquiring an asset (44%).
When asked how they have been looking to mitigate the Covid-19 crisis, the top three strategies identified were refining service and product offerings (63%), revising customer pricing (58%), and undertaking temporary reductions in workforces (56%).
However, 75% of companies declared expectation of at least some economic downturn for Q2 and the early part of Q3.
Looking ahead to the next 12 months, less than a third of organisations (29%) predicted an increase in revenues, while just under a quarter (23%) predicted little to no change, and the remaining 52% predicted a reduction in revenue.
This uncertainty among many European tech firms extends to the prospective effects of Brexit on business, as it returns to the agenda of UK-EU relations; just 10% believe that the impact will be positive, while 48% expect negative effects caused by the UK’s withdrawal within the next two to five years, and 42% expect no real change.
Trade tensions between Western and Chinese industry is also proving precarious, particularly when it comes to intellectual property (IP) and network security; the index score around changes to IP safeguards on tech sector growth increased from 61 in 2018 to 74 in 2020, with Huawei being locked out of 5G infrastructure development being among the most highlighted issues.
65% of respondents, meanwhile, are seeking tighter controls, particularly within telecoms, with 46% wanting a ban on Chinese 5G core services, and 39% wanting a total ban on the involvement of Chinese manufacturers in general.
Looking to views on sustainability, 96% of European tech firms believe that the tech industry isn’t doing enough to address sustainability concerns, while 61% state that the industry should be investing more in energy-efficient technologies.
How small businesses can tackle the issue of sustainability
However, 51% believe companies should be working to become fully carbon-neutral by 2030.
“At the start of 2020, few would have predicted what has unfolded, and that we would see major disruptions and changes in how organisations work, manage their people and serve their customers,” said Kit Burden, global co-head of technology sector at DLA Piper. “Clearly, the expectation is that governments will need to maintain a more active level of involvement in business affairs to re-stimulate their economies, with the tech sector an obvious target for growth.
“We are seeing now more than ever that technology is critical across all sectors, and it’s encouraging to see that firms are embracing change on such a rapid scale and seeking new ways to optimise their existing operations, processes and sales channels, with corporate activity, such as M&A, being one of the most attractive ways to achieve these outcomes”
“With an increasing reliance on remote working, comes a growing focus on network security and data and intellectual property protection. Identifying malign actors, whether state-sponsored or otherwise, and protecting vital strategic assets will be major focus for governments and big tech going forward.”
DLA Piper surveyed 350 senior business executives from across Europe, with the technology, financial services and public sectors being represented.