CEOs confident in continued growth

CEOs confident in continued growth

Chief executive officers of the fastest-growing technology companies in the U.S. and Canada are confident that their companies will continue to expand, according to a Deloitte & Touch LLP survey.


The CEOs are focusing on retaining and hiring the individuals who can help them spark innovation, which they regard as their biggest challenge, according to the survey.

“Innovation and talent is linked,” said Tony Kern, deputy managing partner of the technology, media and telecommunications practice at Deloitte & Touche.

The predictions of growth are slightly higher in this year’s survey of CEOs at the 500 fastest growing companies in North America than last year. Seventy-four percent of the respondents were very confident or extremely confident about their company’s prospects for growth.

External circumstances do not seem to worry the managers as much as other factors. The least challenging factors in sustaining the revenue growth were competitive products and current economic conditions, according to the survey. Instead innovation, developing and bringing new products to the market, followed by hiring the right people and strategic relationships were considered the biggest challenges.

“Bringing innovative products to the market has been the greatest challenge since we started the survey in 2000. But innovation and talent are linked,” said Kern. “Now, we see a big focus on people. The companies have matured and understand that they need to retain and draw highly talented individuals.”

The CEOs point to human resources as critical for their company’s success. Twenty-five percent consider high-quality employees as the most important contributing factor to growth and 27 percent regard finding, hiring and retaining qualified employees as the biggest operational challenge. Thirty-one percent indicated that delegating responsibility and developing new leaders were their most important personal tasks.

“When the economy expands, we see a lot of pressure on talent — today the talent is moved around the globe and that’s an issue in North America,” Kern said.

In fact, offshore outsourcing is a concern as big as terrorism, with 15 percent of the respondents regarding the two factors just as important. “It’s kind of odd,” Kern said, also pointing out that concern about terrorism has dropped 7 percent since last year.

Business that takes place over the Internet or intranets, and technologies related to that, is the industry segment with the most potential for growth over the next year, according to the respondents. Thirty percent of the respondents saw Internet and IP (Internet Protocol)-related technology as having the most potential for growth.

“Focus has been on wireless technology in the last years. I wouldn’t say that it has peaked but it goes over cycles. IP technology is more integrated in companies’ communication systems today. We had a survey some months ago showing that 75- 80 percent of the largest corporations in the U.S. are testing or considering using voice over IP. If a company can consolidate their communications in an IP framework pretty large savings could be made,” Kern said.

The survey was done in the beginning of 2005. Since then interest rates have increased in the U.S.

“We might see a negative impact on the confidence level if the interest rates continue to accelerate,” Kern said. “Low cost of capital is of course of great importance for these growing companies.”

The 150 respondents in the survey were CEOs at companies of Deloitte’s Technology Fast 500, a ranking of the 500 fastest growing technology companies in North America based on revenue growth over five years (fiscal years 1999-2003), plus the 25 fastest growing companies over the last three years.

The great majority of the companies were based in the U.S., and 11 percent were from Canada. The gender breakdown of the respondents is not available.