UK tech sector experiences first decline for eight years
The UK tech sector suffered its worst performance since the 2008 financial crisis in the opening quarter of 2020, as the COVID-19 pandemic led to a swift decline in non-essential spending, cancelled projects and business closures.
The quarterly KPMG UK Tech Monitor Index reveals that business activity across the tech sector declined for the first time in almost eight years, from 50.1 in Q4 to 47.1 in Q1 (with 50.0 representing no change) – the fastest decline in business activity since Q2 2009.
Despite the marked fall in overall business activity, some areas of the tech sector continued to grow in Q1 2020 due to rising demand for services related to home working and business continuity. The software services sub-category bucked the overall trend by registering a slight upturn in business activity even in March (50.8).
One third of firms put IT staff on furlough
Over one third (34%) of UK companies have made members of their IT staff redundant or placed them on furlough schemes, according to a survey commissioned by private equity firm Leonne International. Almost half (49%) have frozen IT budgets for the foreseeable future.
The cuts have been made just when IT professionals are needed to manage the transition to remote working, putting businesses’ data at risk.
More than one third (38%) of UK businesses expect a company data breach to occur due to the use of devices that aren’t properly protected; 37% have allowed members of staff to purchase their own laptops/tablets to work on from home; 37% are aware that members of staff are using outdated versions of the Zoom videoconferencing app.
Cloud services under attack
Attacks on cloud services more than doubled in 2019, accounting for 20% of all cyber-attacks, compared to 7% in 2018, according to the 2020 Trustwave Global Security Report. Corporate environments were the focus of 54% of attacks, followed by e-commerce (22%). Social engineering remains the top method of compromise, with half of all incidents investigated by Trustwave analysts in 2019 caused by phishing or other social engineering tactics, up from 33% in 2018. For the first time, ransomware incidents overtook payment card data as the most common type of security breach – 18% vs. 17%.
IT professionals under pressure
The pressure the Covid-19 crisis has put on IT professionals is highlighted in a new report produced by Cisco company AppDynamics (The Agents of Transformation, Special Edition 2020).
*95% of UK organisations have changed their technology priorities because of the COVID-19 pandemic;
*86% of technologists see this time as an opportunity to show their value to the business;
*82% of technologists state that COVID-19 has created the biggest technology pressure for their organisation they have ever experienced;
*62% of technologists feel under more pressure at work than ever before;
*68% of technologists are being asked to perform tasks and activities they have never had to do before;
*61% of technologists say the pandemic has exposed weaknesses in their digital strategies;
*73% of technologists report that digital transformation projects that would typically take more than a year to be approved have been signed off in a matter of weeks;
*68% point to digital transformation projects that have been implemented within weeks rather than the months or years it would have taken before the pandemic;
*85% of technologists state that the digital customer experience is now the priority.
Half of businesses caught off-guard by transition to home working
Half (49%) of UK businesses were caught off guard by the transition to remote working in March, with larger businesses (250+ employees) particularly badly affected. Research by technology design agency Studio Graphene shows that almost three quarters (72%) of large businesses had to invest in new hardware to enable staff to work from home, compared to 19% of microbusinesses. Almost two thirds (62%) of large businesses also had to invest in new software, compared to an average of 48% across all businesses. Almost half (46%) of large businesses offered digital skills training to employees, compared to one quarter (28%) of microbusinesses.
Remote working fears allayed by lockdown
The experience of lockdown has transformed the attitude of SMEs to remote working reveals a new survey by Hitachi Capital Invoice Finance. Since March, the number of business owners who feel positive about employees working remotely has increased by around 50%, from 52% to 75%. Only 7% have any negative thoughts on the subject. More than three quarters (79%) of business owners plan to implement some form of work from home policy following the lockdown period, with 73% agreeing that home working during this period will help their business to become more successful.
The move to remote working and online learning has produced a sustained 25-35% average increase in internet traffic since mid-March, according to a survey of ISP customers by Netscout, with some countries (e.g. Mexico and Argentina) experiencing twice that level of growth.
Move to remote working hardens case for smart outsourcing
Major challenges, notably the recent transition to remote working, are strengthening the case for the ‘smart sourcing’ of experienced partners that can help organisations adapt to a changing macroeconomic environment, claims NTT in its 2020 Global Managed Services Report.
NTT describes smart sourcing as a move away from traditional ‘outsourcing’ to the selection and prioritisation of service providers that go beyond the delivery of tactical IT solutions to deliver business outcomes aligned to the goals of an entire organisation.
With the global managed services market expected to grow in value from $223 billion to $329 billion over the next five years and the number of respondents outsourcing more than they insource doubling from 23% currently to 45% in 18 months’ time, the report highlights the need for MSPs to increase their value to customers, particularly in relation to security.
While 57% of organisations cite security as a key challenge for in-house IT, 47% of UK security practitioners are reportedly being redeployed away from security duties, leaving organisations more vulnerable to security threats.
The report identifies security as the top reason for an organisation to consider a service provider and their breadth of technical expertise as the number one selection criterion.
Even before the COVID-19 crisis and the greater security risk posed by the explosion of endpoints in remote locations and inadequately secured devices/networks, 84% of organisations said that managed service partnerships would provide value over the next three to five years through their security capabilities. Cloud infrastructure (73%) and security (53%) are currently the two most common technologies to be outsourced to service providers. Over the next 18 months, those numbers are set to increase to 77% and 64% respectively.