VAR500: Job Creation Back On Track

It looks like job creation is back on track at VARBusiness 500 companies, the top solution providers in North America, according to our most recent survey results. According to our exclusive fourth-quarter results, two-thirds (66.3 percent) of the executives surveyed by our third-party research partner, Boston-based Bernett Research Services, anticipate that they will add employees during the first quarter of 2004.

That's up from 55 percent from the prior quarter, the largest increase in the history of our quarterly survey. Conversely, only 2.5 percent are planning a reduction in their workforce, and the remaining third (31.2 percent) expect to retain their present employment level.

In addition, utilization rates of VAR 500 employees are also on the rise. Nearly nine in ten, or 88.7 percent, of the 80 firms polled in this quarterly update, reported workforce utilization rates of more than 60 percent in the fourth quarter, up 17 percentage points from a year ago. Moreover, close to half of the VARBusiness 500 executives (46.3 percent) predict their employee-utilization rates will improve during the first quarter of 2004, while only 5 percent expect their workforce-employee utilization rates to drop.

Four times a year, VARBusiness surveys the executives at the largest North American IT integrators for our quarterly VAR500 survey and asks them economic indicator questions to measure the business pulse among these large solution providers.

When asked how 2003 end-of-year business measured up, more than 40 percent reported that both revenues and gross profit margins were ahead of expectations. This is a substantial increase from the less than one-third reporting their third-quarter revenues and profit margins ahead. The average increase in net profit margins for the fourth quarter was reported to be 12 percent.

And optimism continues for the first quarter of 2004; three out of five respondents (62 percent) believe that 1Q04 will be ahead of the 4Q03, saying that they expect integration and consulting services to increase a significant 40 percent. Security and privacy technologies are also expected to increase, the survey says. Concurrently, almost three of four VAR 500 solution providers (73 percent) anticipate an improvement in their customers' IT spending in 1Q04. More than half (51 percent) of the VAR500 executives interviewed expect their net profit margins to improve for 1Q04.

Health care, banking and finance, and federal government continue to provide the greatest IT sales-growth opportunities to the solution-provider community, according to the VARBusiness 500 fourth-quarter survey.

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