UK IT SME market shrinking

DTI figures reveal five per cent drop

DTI figures are bad news for UK IT

Turnover in the UK IT small business sector shrank from £62.5bn in 2003 to £59.2bn in 2004, a decline of five per cent, according to figures released by the DTI.

The statistics were gathered by the DTI's small business section as part of a general annual survey of the strength of small businesses in the UK.

Richard Holway, director of analyst Ovum Holway, says this shrinkage of small businesses is disturbing.

'Its very alarming to see what is happening to these small IT businesses because the market is so tough that it is frustrating growth in small enterpriseshe said.

'There was a time when being in IT was almost a licence to print money, but that has not been the case for a while now. It is as hard, if not harder, to be in IT as it is to be anywhere else in UK industry.'

'If you worked in IT 10 years ago, your average salary was 60 per cent higher than the average national wage. Now it is about the same. That has reduced the incentive for individuals to move into the sector.'

Holway says he is pessimistic about things improving in the future.

'I have no evidence that things are going to change soon, if I did believe there was some impetous that was going to drive the IT industry, toward double digit growth in the future, I'd be shouting about it. But I'm afraid I just do not see it,' he said.