Tag: recession

UK plc shows signs of growth

ukflagAfter a dreadful dose of the recession clap, it appears the UK economy is showing signs of growth.

It’s growth, but not much growth, according to the Office of National Statistics (ONS).

In the fourth quarter of 2013 the economy grew by 0.7 percent. GDP is growing at 1.9 percent and that is the best UK plc has seen since 2007.

Industrial production fell, and the construction industry fell, too, during the fourth quarter. The other vital signs are a fall in unemployment, while inflation is wobbling along at the Bank of England’s targeted rate of two percent.

Economic turmoil wreaks supply chain havoc

supply-chain-managementThe never ending economic crisis was to blame for more supply chain disruptions last year than insolvencies and horrible weather. According to a survey by Dynamic Markets, commissioned by Oracle, more than half of major companies in Europe, the Middle East and Africa (EMEA) suffered supply chain disruptions caused by economic woes.

Drug czar thinks coke loving bankers caused financial crash

scarfaceThe 2008 financial crash was caused by overleveraged banks, the collapse of the US housing market and a range of other factors. One of those factors might have been cocaine, which is rather popular in banking circles, or so we are told.

Professor David Nutt, the former government drugs czar who lost his job after he famously stated that taking an ecstasy tablet was as safe as riding a horse, believes cocaine contributed to the crash and also led to the 1995 collapse of Barings bank.

Nutt believes cocaine helped take bankers over the edge, as cocaine users tend to be overconfident and take more risks. It can also make people quite boring at parties.

“Bankers use cocaine and got us into this terrible mess. It is a “more” drug;” he told the Sunday Times. He added that cocaine is well suited for the culture of excitement and drive, which is prevalent in the banking world.

On the other hand, who would you rather leave in charge of your personal finances? An alcoholic, a pothead, or an overly confident coked-up loudmouth with a Scarface fetish?

Warehouse space hits record low

forkliftRetail is hurting and the slowdown now appears to be trickling down to warehouse outfits, who are slowly running out of space. 

According to a report from Jones Lang LaSalle, the amount of warehouse space available in the UK is at its lowest level since records began. Some regions are already experiencing shortages of immediately available space.

Tim Johnson of Jones Lang LaSalle told Logistics Manager that the amount of immediately available new floor space is at its lowest level since his outfit started keeping records and it currently sits at just 8 million sq ft UK-wide.

“This is 71 per cent below its pre-recession peak of nearly 29 million sq ft in March 2008 – this definitely affected take up levels last year,” he said.

The vacancy rate in December 2012 stood at about 10 percent across the UK. Overall take-up in 2012 was lower than in 2011 due to a lower level of overall economic activity. Worse, occupier demand slowed down in 2012, but even so the amount of available space kept declining. Construction of new facilities slowed down after the 2008 meltdown and it is currently at the lowest level since 2005.

Jon Sleeman, director EMEA Logistics & Industrial Research at Jones Lang LaSalle, pointed out that the availability of good quality space is now becoming a real issue and some clients are being forced to consider alternatives, such as build to suit developments. On a positive note, he argued that some developers with infrastructure and planning in place stand to benefit from the downturn.

Say Tata to broke Indian outsourcers

Workers are pictured beneath clocks displaying time zones in various parts of the world at an outsourcing centre in BangaloreReports from India suggest that the country’s  IT outsourcing business is turning a corner after being in a slump for a while.

This means that the UK companies can expect to find tougher competition from Indian based software companies, outsources and contract service outfits in the near future.

Analysts predict an improvement in India’s outsourcing industry, which has been gutted for many quarters by shrinking IT budgets and a slowdown in decision making by customers in the traditional markets like US and Europe.

Research firm Offshore Insights predicts that the offshore market for outsourced services is will grow by 12 percent to 15 percent this year, as more customers are expected to increase IT spending.

India’s $100 billion IT services sector seems to be recovering thanks to the acceleration in IT spending by existing customers although there have been a few new sign ups.

This week, Nielsen Holding increased the size of its contract with India’s top software services exporter, Tata Consultancy Services Ltd, to $2.5 billion from $1 billion.

India’s $100 billion IT services sector has been in the doldrums for a while but it seems to be recovering thanks to the acceleration in IT spending by existing customers.

TCS has major clients including General Electric, British Airways and Sony and competes with rival Indian software providers Infosys and Wipro as well as multinational firms such as IBM and Accenture Plc for outsourcing deals.

The National Association of Software and Services Companies (Nasscom) also forecasts that India’s exports of software and services will be between $84 billion to $87 billion in the Indian fiscal year from April 2013 to March 2014.

One of the problems that some business watchers believe that the Indian outsourcers will have to tackle is the fact that they are dependent on a revenue model that is largely dependent on the number of people working on a project.

This worked well when IT labour was cheap. While labour is still comparatively cheap in India, it is getting more expensive meaning that outsourcers have to woo new business with promises based on owning some natty technology and replicable processes.

They will have to shift more of their operations closer to their key markets in the US and Europe.

Triple dip recession threat leaves channel unbothered

gosborneAccording to the Office for National Statistics (ONS), the British economy shrank 0.3 percent in the fourth quarter of 2012, reflecting wider economic woes in the Eurozone and further afield.

The figures were lower than expected for the last three months of 2012 and have sparked fears that, if the economy does not pick up, the UK will enter an unprecedented ‘triple dip recession’ – although arguably, Britain never left the recession at all. Chancellor George Osborne has warned that tough times still lie ahead for the country, but shirked advice from the International Monetary Fund that he and the Coalition should ease up on the policy of austerity.

On the GDP figures, Osborne said: “We have a reminder today that Britain faces a very difficult economic situation”.

The figures serve as a “reminder that last year was particularly difficult” and that the country faces problems at home “because of the debts built up over many years and problems abroad with the Eurozone, where we export most of our products, in recession”. The opposition accused Osborne and Prime Minister David Cameron of being “asleep at the wheel”, although the macroeconomic environment is unrelentingly difficult and both Labour and Conservatives differ on many minutae of policy – with the wider climate beyond their control.

GDP, meanwhile, was flat compared to the same time last year. Production output decreased by 1.8 percent for the quarter, negating a 0.7 percent increase between the second and third quarters. Service industry output was flat from Q3 into Q4, although that followed a 1.2 percent boost between Q2 and Q3 2012.

Britain enjoyed steady GDP growth from 2000 right up until the world markets crashed in 2008, and according to the ONS, the decline of economic conditions in 2008 and up until now has had a significant effect on construction and production – though the service sector wasn’t hit as hard, and is now slowly returning to 2008 levels.

In October last year, channel analyst house Canalys’ CEO, Steve Brazier, said that, despite the difficult economic climate, there is still opportunity in the channel. Although growth was not exactly meteoric, Brazier said that by carefully steering the ship, channel players could weather the storm, although the market will be tough.

 

Senior analyst at Canalys, Rachel Brindley, offered some thoughts to ChannelEye on just what channel players can do to push through the crisis. She tells us the situation isn’t exactly all doom and gloom.

“Some partners will struggle if this economy goes into a triple dip recession,” Brindley said, “but there is a chance that it could happen. That being said, a lot are well placed – those who focus on customer service, keeping existing customers very close, growing their services business an diversifying their portfolio into things like managed services and data centres, will rise to the difficult times we’ve been going through”.

“Generally,” Brindley said, “those that focus on their customers, and diversify their business away from traditional hardware and box shifting will come through OK, it will come down to careful planning and taking opportunities in spaces like the data centre and looking at what’s going on in the networking space”.