Following the Money: A Data-Driven Look at UK IT Company Health

Across LinkedIn over the last few days, I've seen posts about an "AI bubble" and even comparisons to the 2008 crash for the tech sector, this time framed around companies freezing or slowing hiring.

It got me thinking: rather than relying on headlines alone, what can we learn by looking directly at company financials?

The Data Behind the Headlines

I analysed the financial health of 113,773 UK IT companies across four key sectors (SIC codes 62012, 62020, 63110, 62030), removing the top and bottom 1% of outliers to get a cleaner picture of typical company performance.

Employees	Companies	Red Zone (Now)	% Red (Now)	Red Zone (Prev)	% Red (Prev)	Median Debt/Assets (Now)	Median Debt/Assets (Prev)	Median Debt/Equity	Median Assets Growth	Median Net Assets Growth
0–9	108538	28676	26.42	23521	21.67	0.59	0.57	0.33	-0.01	0.00
10–49	4626	898	19.41	806	17.42	0.56	0.55	0.63	0.08	0.07
50–249	577	74	12.82	75	13.00	0.55	0.57	0.94	0.09	0.09
250+	32	3	9.38	2	6.25	0.52	0.55	1.07	0.04	0.00

The Numbers Tell a Different Story

Large Companies (250+ employees) Show Exceptional Stability:

• Only 9.38% have higher liabilities than assets (debt-to-assets ratio ≥ 1.0) currently

• This compares to just 6.25% the previous year

• Average debt-to-assets ratio of just 0.51 (outliers removed)

• Debt position essentially unchanged year-over-year (0.51 vs 0.52 previously)

Mid-sized Companies (50-249 employees) Are Actually Improving:

• 12.82% currently have higher liabilities than assets vs 13.0% previously - a slight improvement

• Average debt-to-assets ratio steady at 0.67 (current) vs 0.66 (previous)

• Over 50% of companies improved their debt position year-over-year

Small Companies (10-49 employees) Show Mixed Signals:

• 19.41% have higher liabilities than assets currently vs 17.42% previously

• Average debt-to-assets: 0.97 - nearly at break-even point (up from 0.88 previously)

• 48.54% still improved their financial position

Micro Companies (0-9 employees) Face More Pressure:

• 26.42% have higher liabilities than assets currently, up from 21.67% previously

• However, 46.09% still improved their debt position

• Average debt-to-assets of 4.6 (current) vs 3.2 (previous)

What This Actually Means

The data reveals three critical insights:

1. This Isn't 2008-09 The data clearly shows this isn't a repeat of the 2008-09 financial crisis. During that period, UK company insolvencies reached 113.1 per 10,000 registered companies - a rate more than twice what we're seeing today (52.4 per 10,000 in 2024). Unlike that crisis where widespread insolvency drove layoffs, most UK IT companies (particularly larger ones) remain financially sound with positive equity positions.

2. Strategic Reallocation, Not Collapse With healthy balance sheets but reduced hiring, companies may be redirecting budgets rather than cutting due to financial distress. The data shows most companies across all size bands maintain debt-to-assets ratios well below 1.0, indicating positive equity positions.

3. Size Still Matters, But Less Than Expected While there's still an inverse relationship between company size and financial stress, the cleaned data shows the gap is smaller than initially appeared. Even micro-companies show a median debt-to-assets ratio of just 0.59, suggesting most small IT firms remain financially sound despite some outliers driving up averages.

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The Bottom Line

Financial analysis gives us a clearer lens on what's really happening. Job ads may be cooling, but many firms remain financially sound - they're just prioritising different kinds of spend.

Rather than an AI bubble burst, we seem to be witnessing strategic market evolution. Companies with healthy balance sheets are investing in transformation rather than traditional headcount growth.

The real opportunity? Understanding that this shift creates demand for different skills - AI strategy, implementation expertise, and change management - rather than signalling industry collapse.

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Analysis based on 113,773 UK IT companies across SIC codes 62012 (Computer programming activities), 62020 (Computer consultancy activities), 63110 (Data processing, hosting and related activities), and 62030 (Computer facilities management activities). Data includes current and previous year financial ratios, growth metrics, and debt analysis.