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Print Edition StoriesFriday, January 23, 2009
Pulse of Technology
Survey says: Glum outlook for N.E. techs
By Galen Moore
How is the economic crisis affecting tech companies?
Regional high-tech professionals remained glum in all technology sectors through the last day of 2008, according to Mass High Tech’s fourth-quarter Pulse of Technology survey.
Confidence in the overall tech economy remained low, with one in five saying they were “not confident” the industry can grow. That number was nearly unchanged since a midquarter MHT survey immediately after bank failures on Wall Street and the collapse of the credit markets.
In addition, more executives now say their companies expect to decrease hiring in the near term. Of 196 October respondents to a work force question, just three said they had expected to reduce hiring — amounting to 1.5 percent. By Jan. 9, 18 out of 715 respondents said they expect to cut back on hiring — amounting to 2.5 percent.
In September, just 5 percent of respondents lacked confidence that the tech industry would grow. But confidence levels dropped precipitously in October — that percentage quadrupled — after Wall Street institution Lehman Brothers Holdings Inc. filed for bankruptcy in September, shortly after the Q3 survey had been conducted by MHT.
Right now, hiring is occurring at early-stage, venture-backed companies and at established companies, while companies in between are “frozen,” said John Barrett, managing director at the Burlington office of the Chicago-based executive search firm Cook Associates Inc. Aggressive players are seeing opportunities to lure good executive talent from troubled companies, Barrett said, but others appear to be sitting on their hands.
“There’s a lot of history that (shows that) back in the dot-com collapse those companies that invested in their management team (found that) it really paid off. I’m disappointed that I don’t see more of that,” he said. “I see companies that are not even affected that much by the economy that are frozen right now.”
Responses to the fourth-quarter survey did show a slight relaxation in cash- flow fears. Lack of capital remained the No. 1 growth constraint cited by 46.1 percent of respondents. But that was down from October, when 55.8 percent said access to capital would inhibit growth of the industry. By the date of the January survey, more technology professionals were citing health care costs, regulatory issues, supply chain and distribution challenges, and other reasons.
Confidence ran highest in the life sciences sector, where 84.1 percent of respondents were confident in growth after Q4. Software was the most pessimistic of four tech sectors surveyed, with 70.3 percent saying they felt confident in growth, after being the most buoyant in Q3 and again in October.
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