UK tech firms reluctant to invest in emerging markets

'Familiar' G7 markets remain attractive to UK business, according to a new report from financial advisory firm Grant Thornton

Three-quarters of medium-sized UK technology companies have no plans to invest in new markets over the next year, preferring to make investments closer to home.

This is one of the main findingd in a report entitled Technology investment report: Unlocking growth potential in emerging markets from financial advisory firm Grant Thornton.

The report states that trends over the past five years for mergers and acquisitions in the technology market show that domestic investment continues to be the top priority for ICT businesses.

"There is a trend in the UK technology market where large corporates are increasingly looking to acquire companies that provide specialist services or offer some innovation that addresses a niche they want to reach," wrote Wendy Hart, head of technology at Grant Thornton UK and the report's author.

"Importantly, the current state of the overall market means that these companies can be acquired more cheaply than might have been possible pre credit-crunch."

The survey also found that 18 per cent of UK technology companies plan domestic investment in the next 12-18 months but that the recession has had an impact on the amount of overseas deals taking place.

"Despite the economic downturn, or perhaps because of it, many technology companies are still looking to consolidate and strengthen their presence at home rather than seeking out riskier, but potentially more rewarding climates," wrote Hart.

Hart believes recent economic turmoil has made UK technology firms more risk-averse.

"Over the last five years the volatility of the global market has inevitably had an impact on the volume of cross-border deals taking place," she said.

"Traditional, mature markets such as those in the G7 [UK, France, Germany, Italy, Japan, US and Canada] remain attractive to UK firms because of a familiar business environment, language commonalities and greater access to highly skilled employees.

"In contrast, outbound investment into fast-growing, tech-friendly economies such as India, China, Brazil and Israel is still relatively low," she added.