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A perception that the UK doesn’t have the stomach to risk major investments in foreign IT companies is continuing to play into the hands of the United States. New research shows the London Stock Exchange and the Alternative Investment Market hosted just 14 technology floats in 2007, compared with 24 the previous year. In contrast to tech firms shunning the UK, the number of IT floats listed on the Nasdaq and the New York Stock Exchange rose to 55, up from 34 in 2006. Foreign IT firms therefore regard the US exchanges as a better place to do business than the UK, says the research by Ernst & Young, obtained by a national paper yesterday. “US investors are more willing to accept the risk of a Chinese technology IPO than UK investors,” John Hughman, a tech analyst at E&Y told the Financial Times. An unnamed London-based banker reportedly explained the US is seen as having greater interest and resources when presented with overseas technology businesses. “There is a deeper pool of capital for technology in the US, and more experience of technology companies.” UK institutions, in contrast, tend to be “stodgy and conservative on tech investments,” he said – also partly explaining why the number of UK IT firms floating dropped from 14 in 2006, to 9 last year. Set against China – the outlook for the UK is bleak: the number of Chinese IT firms going public almost doubled from 19 to 35 last year, while their total value grew by 300%, up from $1.1bn to almost $4.4bn. The reported figures come after a survey by the European Commission found Europe’s R&D spending has fallen since 2000, and in terms of GDP is almost half that in China. Yet in spite of China’s higher IT profile, just 5% of the UK’s leading IT organisations are using China as an offshoring base, according to EquaTerra. But the advisory firm also found that 100% of top IT-led businesses currently offshore all or part of their IT function to India, and plan to continue the strategy. Offshore outsourcing their IT is generally increasing among UK companies, with 54% planning to up their activity, partly because of positive results – just 14% were unsatisfied with the experience. But the lure of offshoring is no longer isolated to cost savings, although it remains the primary incentive; 54% said they outsourced because of skills availability, flexibility or quality of work. Feb 26, 2008 Email this article Printer friendly page Previous Page
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