Santa Clara University: Sharp Drop in Business Confidence in Silicon Valley; But Santa Clara University Business Index Finds No Increase in Outsourcing by Area Businesses

Business Wire, Sept 3, 2004

SANTA CLARA, Calif. -- A monthly survey of business leaders by the Santa Clara University Business Index (SCUBI) found a sharp drop in business confidence in Silicon Valley in August.

The Santa Clara University Business Index forward outlook dropped sharply in August confirming a declining trend in business confidence that began in the first quarter of this year.

All components of the forward looking index, expectations of business conditions for the company and its customers, as well as employment conditions reflected pessimism. The backward indicator, which measures managers opinions of current business conditions relative to six months ago, dropped even more sharply, reaching its lowest level since mid-2003. "Survey participants confirm that the local economy has hit a soft spot similar to what we're seeing in the national statistics," said Robert Hendershott, professor of finance at SCU's Leavey School of Business. "However, their pessimism about the future casts doubt on the idea that the slowdown is necessarily temporary."

In addition to responding to questions about economic conditions now and in the future, survey respondents were asked what extent had their company outsourced functions in the past three months. The survey found little change in outsourcing levels over the past year. In addition, results revealed that manufacturing and IT services were outsourced to the greatest extent. Support and customer services are outsourced to a lesser extent, while minimal outsourcing occurs in research and development and sales. "It is good to know that corporate outsourcing is in a relatively steady-state because a big jump in outsourcing as the economy slowed would be a double-whammy to Silicon Valley workers," Hendershott said.

Since February 2002, the SCU Business Index has asked managers and executives in a wide range of businesses in Silicon Valley to assess their business prospects for the next six months, and compared to the past six months, as well as current and future availability of jobs in their companies. It is managed for the Leavey School of Business by The Survey Company.

Complete SCU Business Index results and methodology for August and earlier months can be found at www.surveycompany.com/SCUBI/SVOutlook.html.> Media: Professor of Finance Robert Hendershott is available to comment on survey results and on business conditions in Silicon Valley. Call 408-554-2162 or 408-554-5125 to arrange an interview.

About the Santa Clara University Business Index survey

This monthly business indicator, the only one of its kind for the Silicon Valley region, is a composite index that every month tracks business conditions in Silicon Valley companies and their markets, as well as trends in job availability in the region, by polling the regions executives and managers.

About The Leavey School of Business

The Leavey School of Business at Santa Clara University began in 1926, and was one of the first business schools in the country to receive national accreditation. Its undergraduate business program has been recognized as one of the best in California, and its MBA program is ranked 10th in the nation among part-time graduate programs. More than 80 percent of its 1,100 MBA students are working professionals in Silicon Valley.

About Santa Clara University

Santa Clara University, a comprehensive Jesuit, Catholic university located in California's Silicon Valley, offers its 8,047 students rigorous undergraduate curricula in arts and sciences, business, and engineering, plus master's and law degrees. Distinguished nationally by the third-highest graduation rate among all U.S. master's universities, California's oldest higher-education institution demonstrates faith-inspired values of ethics and social justice. More information is online at www.scu.edu.