CEO survey: Future is in Internet, software

The Internet, software and life sciences will the three biggest growth areas in technology in the coming year, according to a Deloitte & Touche LLP’s survey of CEOs in its Fast 500 index.

The New York-based consulting and accounting firm surveyed the CEOs of what it considers the 500 fastest growing high-tech companies in the world. The results showed that 27 per cent of the CEOs believed that the Internet had the greatest potential for growth in the coming year, followed by 24 per cent who chose software and 23 per cent who chose life-science applications.

In encouraging news, 89 per cent said they planned to hire new employees in the coming year, while 8 per cent said they won’t be hiring, and three per cent planned a reduction in employees.

North America was picked by 59 per cent of CEOs as the region with the greatest growth potential in the next five years. Western Europe came in second with 20 per cent, followed by Japan with seven per cent and China with three per cent. India, Russia and Central and South America all drew 1 per cent and other areas took the remaining seven per cent.

Last year, the results were more evenly distributed, with North America selected by 30 per cent of CEOs, China by 24 per cent and Western Europe by 23 per cent.

This year also saw changes in how highly CEOs value their employees. In the 2001 survey, 49 per cent of the CEOs said that high-quality employees made the biggest contribution to their company’s success. This year, only 30 per cent pointed to employees as having made the greatest contribution. Of those surveyed 29 per cent cited products, 23 per cent said having the right timing in the marketplace, and 10 per cent said proprietary technology were the biggest contributors.

Another change from 2001 to 2002 was in the area of what CEOs see as their greatest challenge. In 2001, 30 per cent said managing expectations was their greatest challenge, followed by 21 per cent who said managing risk, 18 per cent said achieving profitability, 13 per cent said delegating responsibility and 10 per cent said uncontrollable growth. The rest fell into the “other” category.

But this year’s survey saw profitability topping the list with 34 per cent, followed by developing leaders and delegating responsibility with 24 per cent, managing expectations at 10 per cent, managing risk and engaging employees in the company vision each taking 8 per cent and the rest falling over a number of other categories. Only two per cent called containing costs their biggest personal challenge.

This year’s survey swerved away from past years due to the events of Sept. 11 and the downturn in the economy. This year, questions were included on how CEOs were handling security and whether the downturn was affecting their companies and their view of the future.

Most of the CEOs expressed some optimism that their companies would sustain high rates of growth in the next 12 months. Forty-one per cent said they were “very confident” their companies could sustain high rates of growth, 21 per cent were “extremely confident” and 28 per cent were “somewhat confident.” Only four per cent were pessimistic.

A full 56 per cent said the nation’s current emphasis on security would have no impact on their company. Thirty-seven per cent thought it would boost growth, four per cent thought it would inhibit growth and three per cent answered “other.”

Each year, Deloitte & Touche selects the Fast 500 from companies that have sustained a high rate of growth during the past five years.

The Fast 500 are drawn from companies headquartered in North America that have been in business for at least five years, that have current operating revenues of at least $1 million and that own a proprietary technology. This year’s list includes San Jose-based eBay Inc.; Bellevue, Wash.-based InfoSpace Inc.; and Ottawa-based Dynex Power Inc.