Spotlight on French IT sector

How has the software & computing services companies and IT wholesalers sector performed in the last six months?

After seven years of steady growth in IT purchasing, 2009 was a very disappointing year, ending with a contraction of between 2 % and 3% in the global IT trade sector. Performance in the first quarter of 2010 was still sluggish, but we have noticed significant signs of recovery since the second quarter.

What is the current trend in insolvencies?

The insolvency trend has evolved favourably for software & computing services companies [SCSC], and Crédito y Caución is seeing positive performance in both wholesale IT products and SCSC, with few credit insurance claims.

What is Crédito y Caucións short term outlook for the IT sector?

SCSC will grow modestly in 2010. Crédito y Caución expects small and medium sized players to benefit most from the recovery, thanks to their higher flexibility. Most companies are hiring new staff and 75% of the main groups should increase the number of employees before end of 2010. For the IT wholesale subsector, the coming months should also be positive, with growth of around 5%, driven mainly by demand from individual end-customers. However, IT purchases by businesses are expected to remain flat for the time being.

What is the Crédito y Caución underwriting approach to the sector?

Our approach is generally positive, but Crédito y Caución is paying close attention to the behaviour of the main IT customers, such as the public sector, banks and insurance companies, in view of budget constraints and subsequent lower IT purchases. Moreover, although the outlook for the IT market is positive, Crédito y Caución has noticed considerable pressure on prices and margins and this could have a negative effect on suppliers in the sector.