The UK IT industry's commitment to research and development (R&D) has increased again over the past year.
The total investment in UK technology R&D was £1.88bn during the 2005/06 financial year, accounting for 9.8 per cent of all R&D in the UK, according to the Department of Trade and Industry's (DTI) annual R&D scoreboard report. The total R &D of all UK companies has increased by £2.2bn to £19.2bn.
The survey shows that the IT hardware and software and IT services sectors both showed an increase in R&D 'intensity' - an important measure of R& D as a percentage of sales - compared to 2005/06.
The top three companies in the UK in terms of intensity were all IT companies; SCI Entertainment with 49.4 per cent, ARM with 34.5 per cent and Autonomy with 22.8 per cent.
The top three technology R&D spenders are Marconi – now Telent (£186m), Nokia (£101m) and NDS (£50m).
Report author Dr Mike Tubbs, senior industrialist in the business finance and investment unit of the DTI’s innovation group, says that the software industry is doing well in the UK.
'The software industry has put a lot into R&D and has therefore increased profitability. Technology hardware was doing very well in 2000, but after the dot com boom a lot of these companies lost sales,' said Tubbs.
'What we found was that a number of companies whose sales stagnated in 2001/2002 after this downturn reduced R&D to cut costs. But companies who took the opposite view, increased R&D, and improved their product range, are reaping their benefits in terms of sales now. Autonomy is the chief example of a UK company doing innovation in a recession like this,' he said .
Tubbs says it typically takes longer than two years for the benefits of R &D to be seen, but in the IT sector results could be seen more quickly than others.
'This is one of the new things this year. In a sector like pharmaceuticals you have something like an eight-year delay between a patent and launch. In IT and especially software, things can happen a lot more quickly. This makes it easier when trying to persuade the boardroom to invest in R&D when sales are dropping,' said Tubbs.
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Further Reading:
Industry calls for R&D tax credits shake-up
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