IT firms urged to go East to beat downturn

Millions of potential customers for UK tech innovation in India and China

UK IT companies can beat the recession by developing innovative new technology and expanding international sales, say experts, and should take advantage of government grants and support provided by UK Trade & Investment (UKTI) to help them both find new customers abroad and attract foreign investment into the UK.

Executives from mobile communications, software and semiconductor companies joined those from telcos, mobile operators, service providers and IT consultancies at the Cambridge Wireless International Conference in Cambridge last week to discuss ways of riding out the current economic crisis.

And rather than scaling down research and development activity due to budgetary restraints, British companies were instead urged to ramp up their quest for new technology with mass market appeal in the global mobile communications sector.

Richard Traherne, director of the wireless division at Cambridge Consultants, a company which nurtures new technology ideas into commercial products and services says that many world-changing new technologies were born during periods of recession, including the world's first electronic computer, Microsoft's MS-DOS operating system, and the Google search engine.

"People remember the last downturn and how long it took them to recover from failing to innovate in that period," he said. "IT companies are cost-cutting and battening down the hatches because in a downturn the markets available to them shrink, but that makes it even more critical that they do not get left behind".

"Enormous markets [in China and India] that were previously inaccessible are now accessible, and there are good margins, or at least revenue, to be made from hundreds of millions of potential customers," added Dr David Cleevely, chairman of wireless spectrum monitoring company Cambridge Radio Frequency Services (CRFS), and the founder and former chairman of telecoms consultancy Analysys.

But Sir David Brown, chairman of the Ofcom Spectrum Advisory Board and former chief executive of Motorola, warned UK companies to identify specific areas of customer demand before expanding their ideas.

"Demand for communications technology is insatiable – the only question is what to invest in, when and where. Those are big questions, and involving consumers is critical in coming up with the right answers," he said.

Brown also urged wireless comms companies to work harder at delivering truly mobile wireless internet access and applications on portable devices, rather than just a stepping stone transition from the wired PC world.

"Although wireless touches the lives of two-thirds of the world's population, it has not permeated them, not as long as they have to fall back on wired equivalents. To have a wireless device in your hand but still feel out of touch is a debilitating frustration we have all suffered," he said.

Modest assistance for all UK companies looking to establish international sales operations is available through UKTI, with an extra £10m of funding for the body recently outlined in last month's Budget, according to Robert Driver, UKTI director of high technology sectors.

"This is aimed at more experienced companies expecting to expand in global markets. We are looking to offer specialist legal advice and grants of £1,800 to those willing to participate in exhibitions abroad," he said.

Companies do not necessarily have to sell IT products and services to Asian markets in order to benefit from them, however, many are already offshoring their own R&D and application development work in order to reap financial dividends.

Conversely, Driver was keen to talk up the UK technology sector's own pool of IT talent.

"The aim of the UKTI strategy is to ensure that the UK is renowned for delivering business value and innovative technology across the world. We support a thriving R&D base representing a £9bn investment, and lots of software developers across a range of sectors. Overseas IT companies find the UK an attractive location for R&D," he said.