Published on 20/07/2016 by Punchmedia

Pokémon Go Adds to a Growth Industry

There's no doubt you've heard about the Pokémon Go craze that is currently sweeping the country. Due to its overwhelming popularity and geographically based play, many businesses are now trying to work out how to cash in on the phenomenon.

The explosion of Pokémon Go prompted us to look into the Computer Systems and Design Industry and continued growth over the past five years.

Revenue and Growth Trends

Industry revenue is projected to increase by 2.2% in 2015-16, with annualised growth of 3.3% over the five years through 2015-16, to reach $45.3 billion. In line with increased online connectivity, businesses have sought to develop their IT infrastructure, which has supported strong demand for industry services. Areas of spending that have supported industry growth include increasing data transfer speeds, cloud investments, internet-based telephony services (such as VoIP), unified communication models and IT department outsourcing.

Increasing Connectivity

IT consultants operate in a dynamic business environment. Rapid growth in internet usage and cloud computing over the past five years has caused major changes in the types of computing services demanded by client businesses, the programming languages required across the industry, and capital inputs needed by downstream client businesses. Demand for IT workers with specific skills for highly specialised projects has increased steadily over the period. As consulting needs can be sporadic, many clients are reluctant to hire in-house staff and instead prefer to outsource to industry operators. The combination of rapidly changing technology and the cost savings that industry services offer have helped the industry grow strongly over the five years through 2015-16.

Industry Structure Trends

Over the past five years, industry employment has increased at a steady rate. Despite slower revenue growth in the years following the global financial crisis, many companies in the industry cut wages instead of reducing staff numbers. While many client companies reduced IT staff numbers to cut costs, industry firms hired many of these workers and contracted back to the same client companies. With continued industry demand growth, greater investment in software and further IT adoption, enterprise numbers have increased during the five years through 2015-16. This has partly been due to a rising number of small, specialised industry players. Increases in the number of small non-employing enterprises over the past five years has supported growth in enterprise numbers. Many of these enterprises service niche markets, develop specialised software or systems, or service small or remote geographic regions.

Rising Competition

Despite strong growth, the industry has faced several obstacles over the past five years. For example, the Federal Government offers major contracts for renewal by tender. The tender process often requires reduced prices and increased services due to intense industry competition. Greater government scrutiny of expenditure and contract processes has also limited price growth in the segment, resulting in the government market declining as a proportion of industry revenue over the five years through 2015-16. Another ongoing trend affecting the industry is the increasing amount of overlap between IT consulting and other business solution services. Competition is increasing between IT and other consulting firms in areas once considered distinct, most notably management consultancy. This greater competition across different industries has led to lower prices for computer system design companies in the past five years.  

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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