Specialist research group IDC says that the financial pressures felt by IT vendors and their customers will actually accelerate industry transformation that has been underway over the last several years. So despite the heavy cutbacks in the IT sector, IT spending will continue in areas where the benefits are clear.
True, companies have been slashing IT budgets and IT companies have, in turn, been issuing profit warnings. And whats more, with IDC predicting that global IT spend will slow to at least half of previous levels, stripping off more than $35bn (£23.6bn) of potential revenue from the market, the outlook looks fairly unfavourable.
But the silver lining remains, and companies that offer technologies which drive efficiencies and generate clear, and preferably short term benefits, are likely to emerge from the downturn relatively unscathed.
This explains why management at Aim-listed Imaginatik, which develops innovation and collaborative problem-solving software are not expecting any decline in demand for its solutions. The software gathers ideas generated by employees of large clients - corporates - and even calculates the value of these ideas, which not only saves clients money but also is a positive metric for winning new clients. In fact, Imaginatik's software has saved its clients a combined £170m in the last 2 years. With cash on the balance sheet, and am strong sales pipeline and growing recurring revenue base, the group also makes for a solid acquisition target with shares currently trading at just 2.1p.
Touch sensor and optical fibre-based manufacturers, Zytronic also recently surprised with strong results for its year to 30 September. The group provides touch-sensitive technologies which are used in automated teller machines (ATM)s, shopping and petrol kiosks and gaming stations. Revenues rose by just under 30 per cent to £11.4m, and with record orders and a growing order book, management conveyed their confidence through raising dividends from 3p to 4p per share.
Real time data signal processing software provider ViaLogy should also see increased demand in the downturn, The group's software is unique as it uses revolutionary signal processing algorithms which allows for the detection of very weak signals from large amounts of information, background noise and clutter. The technology has many uses, including determining, and quantifying oil deposits left in abandoned oil wells. And despite being a young company, the group already boost clients in defence, government and the oil and gas arena.
But its not only the super high tech companies that will gain from this drive for efficiency. Companies like Cybit Holdings, which develops and markets vehicle and fleet management software can also gain, with management recently flagging that reduced costs from tighter fleet management has bolstered demand for its telematics since the downturn.
Meanwhile, IDC also tips the online economy to benefit from the ailing economy as consumers seek out better value for their money, while mobile gadgets are looking rather out of favour as budgets tighten.
