Sector trends & challenges
Development and growth
A tech-enabled economic recovery is likely to see an acceleration in investment with a focus on building resilience in tech infrastructure within corporate and home environments. Growth of Internet of Things (IoT) and AI is also expected to continue.
Higher operating standards
Privacy, security and reliability concerns mean companies are being held to higher operating standards in the form of increased regulation. New investment in this area will increase pressure on liquidity and working capital.
Some technology providers have faced supply challenges due to significant demand for semiconductors. As manufacturing capacity is slow to build, this shortage is likely to persist.
Sector rating profile
There are no significant signs of stress or distress in the major technology sub-sectors.
The immediate demand requirements resulting from the COVID-19 pandemic have generally helped the technology sector, from hardware manufacturers and suppliers through to service providers. Indeed, the challenge faced by some tech operators has been managing capacity challenges, particularly on web-based services, due to the rapid increase in usage.
Technology projects are likely to be insulated from wider economic challenges as investment in this area is expected to remain a major priority for corporates. That said, we anticipate that further consolidation within the UK tech ecosystem is likely. Many start-ups continue to have additional cash requirements and in the post-COVID environment, may be seeking alternate funding to see products through the development cycle.
Privacy, security and reliability concerns mean companies are being held to increasingly high operating standards in the form of increased regulation scrutiny. This may start to impact business models and investment requirements as legislation in this space evolves.
A tech-enabled economic recovery is likely to see an acceleration in aggregate investment with a focus on building resilience in tech infrastructure within corporate and home environments. Growth of IoT and AI is also anticipated to gather momentum over the next twelve months.
Find Your Expert
Mark Raddan is Interpath Lead for the Technology, Media and Telecommunications sector. Neil Speight leads our approach to Technology nationally. For a full list of our senior people with experience in the sector use the button below.Our senior team