Tech CEOs Outlook "Extremely Confident"

By Allen Bernard

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Confident technology CEOs are shrugging off economic and security worries and focusing inward to strengthen their companies and increase growth, according to Deloitte's Technology Fast 500 CEO Survey of the fastest growing technology companies in North America as ranked on Deloitte's Technology Fast 500.

"Fast 500 CEOs are confident that the economy and their businesses are poised for growth," said Tony Kern, a principal with Deloitte & Touche and deputy national managing principal of Deloitte's U.S. TMT industry practice. "Tech CEOs are focused on facilitating that growth by improving internal operations and hiring and retaining talent, rather than on external issues, such as economic conditions and geopolitical instability."

Ninety-five percent (95%) of the CEOs have plans to grow their workforce. Forty-two percent (42%) indicate plans to add at least 25% more employees in the next 12 months, while 19% have plans to add more than 50%.

High-quality employees are the greatest contributors to success, according to 25% of respondents, up from 19% last year. However, finding, hiring and retaining qualified employees remains CEOs' biggest operational challenge at 27% -- the same as last year.

Compared with last year's survey, far more CEOs (36% compared to 21% in last year's survey) are "extremely" confident about their company's growth prospects during 2005. Nearly three-quarters of the CEOs are "extremely" or "very" confident about their companies' future growth.

To put this confidence in perspective, the Fast 500 winners demonstrated average revenue growth of 4,109% over the past 5 years. Percentages ranged from 329% to 437,115%.

IP Tops List

Almost two-thirds of the CEOs surveyed (61%) said IP business applications are "extremely" or "very" important.

The vast majority (67%) are using IP-based applications primarily for communications, and half (51%) use it internally to connect employees across regions.

Almost half use IP-based sales and marketing and customer support/CRM systems. (Respondents could choose multiple answers.)

The industry segment the CEOs see as offering the greatest potential for growth over the next 12 months has shifted from wireless communications services last year (23%) to Internet/IP-related services this year (30%).

Longer-term prospects for the Internet segment are also optimistic, with 21% of the CEOs choosing it as the industry segment with the greatest potential for growth over the next three years, up from 19% last year.

Economic Concerns Recede

Concerns about economic conditions have faded, and are only an issue for two percent of the CEOs this year, down significantly from 16% last year. Perhaps as a result, managing cash flow is not as big of an issue this year as it was last year; it concerns 11% of the CEOs surveyed, down from 17% last year.

The necessity of a strong business strategy ranked higher this year, 21% this year compared to 16% last year. Developing a strong sales and marketing strategy, however, is important to only 21% of the CEOs, down dramatically from 33% last year.

Having exceptional or unique products is not as big a priority either, dropping to 13% this year from 24% last year.

While the biggest challenge in sustaining growth continues to be bringing new products to market (27%, consistent with last year), other challenges are of increasing concern.

Twice as many CEOs are concerned about competitive pressure on pricing (13%, up from 6% last year), and far more are concerned with building strategic relationships (15%, up from 3% last year).

Survey Methodology

The Technology Fast 500 CEO Survey is an annual poll administered to CEOs of companies ranked on Deloitte's Technology Fast 500. Nearly 150 CEOs responded to the 2005 Survey, which was conducted in the first quarter of 2005 by Deloitte's Technology, Media & Telecommunications (TMT) Group. Deloitte's Technology Fast 500 is an annual ranking of the fastest growing technology companies in North America based on percentage revenue growth over five years.