The worst may be over for IT industry, says OECD

The worst of the recession may have passed for the global IT industry, according to a new report from the Organisation for Economic Co-operation and Development (OECD).

“There are signs of recovery, with the rate of decline bottoming out and turning up in the most recent cyclical data (May/June 2009), with positive month-on-month growth for most countries, and inventories running down sharply” the report says.

The exhaustive report looked at a number of economic indicators for the health of the IT sector. One such measure is performance of the semiconductor industry, which the report describes as “as the bellwether for the ICT goods industry.”

Last year saw heavy losses in the semiconductor industry, as a hardware sales ground to a halt. “A modest month-on-month upturn since March 2009 suggests that demand is beginning to stabilise, albeit at substantially lower levels than one year
earlier and some commentators see a return to growth towards the end of 2009,” the report says.

In the US, venture capital funding for ICT companies has held relatively well compared to other industries. “The most recent US data) show that ICT venture capital has held up moderately well, and the share of ICTs in total venture capital remains stable at around 50% even if it has declined from over 75% at its peak in the Internet bubble.”

Much of the cause of the OECD’s optimism came from comparison between the state of the IT sector in the current recession and during the dot-com crash. The report declares, for example, that “the top-10 software firms had a total annual revenue growth of 12% in 2008 compared to 6% in 2001”.

Also, “major IT equipment firms had more net cash at the outset of the recent economic downturn than before the bust,” and are in better shape now as a result.

While it comes as some reassurance that the IT sector better off now than its darkest days, it is perhaps not quite cause for celebration yet.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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