EquipmentLeasing.org Login | Newsroom | Contact Us
Success Stories

We have never provided a financing option to our customer before. But ever since we made the option available, more people are purchasing through financing...site traffic has increased greatly from their marketing campaigns…

Read More
Sponsored Link
Clone Office Cubicles: Factory Direct Office and Call Center Cubicles

Defining space since 1985, Clone Office Cubicles has been the factory direct source for new office cubicles. Celebrating 27 years of offering wholesale office furniture to the public.

www.clonecubicles.com
Sponsored Link
Industry Research IT

Industry Spotlight: IT Equipment New Regulation and Insights

Finance & Regulation

Since IT companies mainly provide expertise, labor is their largest expense. Companies typically have highly variable cash flow that is dependent on timely receivables management, investment opportunities and large outsourcing contracts, and effective capital management. Accounts receivable are typically about 25 percent of sales. Companies often use forward contracts to hedge against future risk, such as fluctuations in foreign currency. Data processing and outsourcing services providers have large investments in computer centers and periodically must make additional investments to upgrade their computer systems.

IT companies that do business with the US government fall under various governmental contracting and accounting regulations, including federal acquisition regulations, cost accounting standards, and federal agency audits. Companies that have extensive overseas operations must also abide by international and local country regulations covering trade and labor conditions, among others.

International Insights

Worldwide IT services revenue is about $800 billion, according to Gartner. Of the top 15 exporters of computer and technology services, the European Union nations lead by far, with a combined 58 percent market share, followed by India with 19 percent. Other leading exporters include the US (7 percent), Israel (4 percent), and China (3 percent), according to the World Trade Organization. Major companies based outside the US include Fujitsu (Japan), T-Systems International (a subsidiary of Germany’s Deutsche Telekom), and Cap Gemini (France).

Global spending on IT services is expected to grow by as much as 6.6 percent in 2011, according to Gartner. IT spending has grown most in computing hardware, telecom, enterprise software, and pure IT services. Emerging markets are important to the worldwide IT industry, fueled in large part by low prices for equipment and services. More than half of all PC sales come from developing countries, and China has become a leading IT market, according to Plunkett Research.

Computer Technology Services Exports – World Trade Organization

Global service providers are sensitive to changes in their customers’ business. Companies that provide IT services to telecom carriers, financial firms, and large manufacturers, for instance, face profitability risks when their clients suffer losses. In addition, some IT firms like Fujitsu rely on local and national governments for a significant portion of their business; likewise, changes in e-government initiatives and other IT policies can impact sales.

The migration to public cloud computing services presents a key opportunity to the international IT sector. Worldwide cloud services were anticipated to reach nearly $90 billion in 2011 and climb to $177 billion by 2015, according to Gartner. Cloud services enable companies and organizations to store data remotely without relying on their own physical servers.

Many US IT companies have substantial foreign revenues, since computer systems are heavily used in many countries outside North America. Some IT companies engaged in data processing or the outsourcing of computing or programming activities have established operations in countries like India, where labor costs are lower than in the US.

Regional Highlights

In the US, the number of IT service professionals in a state is inversely related to the average hourly rates for IT service. Fewer IT consultants in states like Wyoming and Alaska mean longer wait times for service and higher rates.

Human Resources

IT companies need technologically skilled labor, and finding and keeping such labor is an ongoing concern. Firms find entry-level employees among recent college graduates who have degrees in computer science or mathematics. IT skills and experience bring premium pay: average hourly industry wages are significantly higher than the national average — almost double. A few key people often determine the success of a smaller firm. Annual turnover is an industry-wide issue for professional services (including IT), and firms have significant expenses for finding, training, and retaining qualified labor. The IT industry’s safety record is excellent, with an extremely low incidence of injuries.

The strong growth in demand for IT professionals in the past decade prompted many firms to recruit abroad. Firms sponsor foreign professionals and bring them to the US through visas under the H-1B program, which can allow visa holders to work in the US for up to six years.

Quarterly Industry Update

Cloud Demands to Boost IT Employment – Rising investment in cloud technologies is helping to boost IT employment, according to one recent study. The Wanted Analytics survey reported by eWEEK found a 61 percent increase from the year before in demand for IT professionals with cloud computing experience, based on job ads posted by some 2,400 US businesses over 90 days at the end of 2011. The data indicates that cloud computing – the concept of shared IT resources, software, and other information provided to computers and mobile devices over a network – is fast becoming an entrenched service for a majority of firms. San Francisco; Seattle; Washington, DC; and New York are among the cities with particularly high demand. As a result, IT recruiting will likely become more challenging as companies endeavor to fill these new jobs.

IT Spending Forecasts Mixed – Industry observers are giving mixed forecasts for 2012 IT spending. Gartner predicts little increase from 2011 amid a backdrop of sluggish economic growth but notes that firms in emerging economies are spending faster than those in the US and Europe. Meanwhile, IDC anticipates 6.9 percent spending growth, a more bullish estimate driven by advances in smartphones, tablets, social networking, and big data analytics, according to Network World Fusion. Consequently, some companies that delayed hiring tech professionals during the late 2000s recession are once again hiring, although others continue to struggle with inflated expenses.

Industry Indicators

Total US consumer spending, a driver for the IT needs of consumers, rose 2.4 percent, primarily from nondurable goods expenditures, in January 2012 compared to the same month in 2011.

US corporate profits, an indicator for corporate investment in information technology, rose 7.9 percent in the third quarter of 2011 compared to the same period in 2010.

Total US revenue for computer systems design and related services rose 12.1 percent in the fourth quarter of 2011 compared to the same period in 2010.

Comments are closed.